FTX, Alameda reach ‘in-principle’ deal with Blockchain for $874M
Bankrupt crypto firms BlockFi and FTX have reached an agreement “in principle” to resolve their dispute, with FTX agreeing to pay up to $874.5 million to BlockFi and dismiss its claims against the firm, according to a March 6 court filing.
The terms of the deal will be approved by US Bankruptcy Judge John Dorsey in Wilmington, Delaware.
The settlement resolves BlockFi's claims against FTX, totaling nearly $1 billion, and also sees FTX release “millions of dollars in rescission claims and other claims” against BlockFi.
The $874.5 million is based on a $185.2 million claim against FTX.com — which represents the value of BlockFi's client assets — along with a $689.3 million claim for loans received from BlockFi, according to Alameda Research.
$250 million of the total sum of the proposed settlement is considered a “verified claim”, which gives priority to the payment of BlockFi after FTX emerges from bankruptcy. The rest depends on the ability of FTX to pay its customers and other creditors first.
BlockFi's bankruptcy trustees said the result was achieved through “early arbitration” that reduced litigation costs and “ensures that funds earmarked for litigation with FTX are instead directed toward client distributions.”
“This negotiated settlement represents a positive outcome for BlockFi and its customers – even better than expected on the plan's effective date.”
Related: BlockFi Asks Court to Convert Commercial-Only Assets to Stablecoin
BlockFi filed for Chapter 11 bankruptcy protection on November 28, 2022, citing its exposure to FTX's shock collapse earlier that month.
The two companies sued each other in 2023.
BlockFi said FTX owed more than $1 billion in debt, which came from a $400 million line of credit and a $900 million loan to Alameda Research. That loan was almost 99% funded by FTX's token, FTT, which is almost 99% of FTX's collapse.
BlockFi sued Sam Bankman-Fried Holding Co., seeking access to 56 million Robinhood shares that Alameda Research allegedly held as collateral for a loan it gave to BlockFi.
However, BlockFi owes FTX.US up to $275 million under its 2022 bailout loan.
Estimates show BlockFi owes up to $10 billion to more than 100,000 creditors. 1 billion dollars to the three largest creditors and 220 million dollars to the bankrupt crypto hedge fund, Three Arrows Capital.
In addition to BlockFi Wallet customers, those using an interest-bearing BlockFi account are also expected to be able to withdraw some assets in 2024 — though the estimated fee is unclear.
BlockFi emerged from bankruptcy in October 2023 and opened a wallet to allow customer withdrawals.
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