Court Allows BlockFi To Start Paying Out Funds To Customers As Part Of Bankruptcy Proceedings
Bankrupt cryptocurrency lender BlockFi has received court approval to pay out funds to affected customers. Some of them will only receive partial payments.
According to the latest court filings, BlockFi's unsecured creditors will receive 35% to 63% of the amount owed to them in the form of BTC and ETH. Interestingly, the amount they will ultimately receive will depend on the outcome of the litigation between BlockFi, Three Arrows Capital and FTX. BlockFi claims that its bankruptcy was a result of the collapse of FTX, but the FTX side claims that BlockFi was aware of FTX's financial problems even before its collapse in November 2022. And that didn't stop BlockFi from extending credit to FTX.
Despite the current disputes, both parties are pleased that BlockFi has had the opportunity to settle with affected customers.
Once-popular cryptocurrency lender BlockFi filed for bankruptcy amid the collapse of FTX in 2022. The lender's initial plans included restructuring the company, but as the bankruptcy proceedings progressed, it became clear that this was the worst-case scenario. Management decided to liquidate BlockFi completely and pay out funds to affected customers.