FTX, BlockFi has been allowed to proceed with the settlement, the judge announced
Bankrupt crypto companies FTX and BlockFi have been allowed to continue negotiations to settle their claims, according to a new court filing.
In the year On November 13, US Bankruptcy Judge Michael Kaplan ordered an end to the automatic stay on the proceedings between the two firms. FTX's creditors can now pursue “arguments, defenses, claims, counterclaims or otherwise” regarding BlockFi's claims in FTX's bankruptcy proceedings.
Both entities filed for Chapter 11 bankruptcy in November 2022 at the beginning of the month following the FTX implosion. BlockFi has about $355 million blocked on the FTX platform and is estimated to owe an additional $671 million, according to Alameda Research.
The order also states that FTX's debtors are not entitled to “receive positive distributions from BlockFi's liabilities” and that both parties must submit to arbitration in the US Bankruptcy Court for the District of Delaware as soon as possible.
Once entered, arbitration will begin “no later than” December 24, 2023.
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Blockchain CEO Zach Prince testified in the five-week criminal trial of Sam Bankman-Fried, in which the former FTX CEO was found guilty of all charges against him.
Prince and the BlockFi team presented evidence on October 13, showing that if FTX had not gone under, BlockFi would not have had to file for bankruptcy regardless of the ongoing bear market conditions. The company lost “a little over a billion dollars” in the collapse of FTX and Alameda.
BlockFi was allowed by a court in August to pay its wallet customers in the US, even though withdrawals were banned at the time. Shortly thereafter, in September, BlockFi's creditors approved a bankruptcy restructuring plan, which was then approved by the court on September 26.
On October 24th, BlockFi released a blog post stating that it will begin refunding certain lenders and that withdrawals are “currently available to almost all Wallet customers.”
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