BlockFi Settles With FTX, Alameda Estates for $874.5M

Bankrupt
crypto
lender
BlockFi,

which
was
caught
in
the
contagion
of
FTX
and
declared
bankruptcy
days
after
the
exchange’s
collapse,
has
reached
an
“in
principle”
agreement
with
the
estates
of
FTX
and
Alameda
Research
for
nearly
$1
billion,

according
to
a
recent
court
filing,
which
could
lead
to
full
value
recovery
for
BlockFi’s
customers.

Under
the
settlement,
BlockFi
will
receive
a
total
of
$874.5
million
in
claims
against
FTX
and
Alameda
Research.
$250
million
will
be
treated
as
a
secured
claim,
which
will
prioritize
payment
to
BlockFi
after
FTX
plan
to
end
bankruptcy,

which
was
filed
in
December,
is
approved
by
its
creditors.

In
turn,
FTX
will
drop
its
claims
against
BlockFi,
allowing
BlockFi’s
remaining
claims
to
be
paid
out
like
other
similar
claims
under
FTX’s
plan
according
to
the
settlement.
A
judge
still
needs
to
sign
off
on
the
agreement.

“We’re
pleased
to
have
been
able
to
reach
a
result,
with
the
assistance
of
Judge
Goldblatt,
that
allows
BlockFi’s
claims
against
FTX
for
the
full
value
of
loans
to
Alameda
and
assets
on
the
FTX
exchange,
waives
“clawback”
claims
by
FTX
that
could
diminish
those
claims,
and
provides
BlockFi
with
a
partially
secured
claim,”
Kenneth
Aulet,
partner
at
Brown
Rudnick,
which
represented
the
Committee
of
Unsecured
Creditors,
said
in
an
emailed
statement.
“[It
is]
an
excellent
outcome
for
BlockFi’s
customers
and
creditors.”

FTX,
Alameda,
and
BlockFi
had
a
complicated
and
intertwined
relationship.
BlockFi
received
a
$400
million
line
of
credit
from
FTX,
and
FTX,
under
its
legal
name
West
Realm
Shires,
was
one
of
BlockFi’s
largest
creditors
with
a
$275
million
claim.

“This
negotiated
agreement
represents
an
excellent
outcome
for
BlockFi
and
its
customers
–
one
better
than
could
have
been
anticipated
even
on
the
effective
date
of
the
Plan,”
BlockFi’s
bankruptcy
administrators
wrote
in
the
filing.
“[This
Plan]
ensures
that
money
reserved
for
litigation
with
FTX
is
directed
instead
to
customer
distributions.”