Following its bankruptcy amid the fallout from FTX’s collapse, cryptocurrency lender BlockFi has reached an “in principle” agreement with the estates of FTX and Alameda Research for nearly $1 billion, as disclosed in a recent court filing. This agreement holds the potential for BlockFi’s customers to recover the full value of their assets.
With the settlement, BlockFi is set to receive a total of $874.5 million in claims against FTX and Alameda Research, with $250 million designated as a secured claim. This secured claim will ensure that BlockFi is prioritised for payment once FTX’s bankruptcy plan, filed in December, is approved by its creditors.
In exchange, FTX will drop its claims against BlockFi, allowing the remaining claims of BlockFi to be treated similarly to other claims under FTX’s plan. However, the agreement is subject to approval by a judge.
Kenneth Aulet, a partner at Brown Rudnick representing the Committee of Unsecured Creditors, expressed satisfaction with the outcome, highlighting that the settlement protects BlockFi’s claims against FTX and provides a partially secured claim, ultimately benefiting BlockFi’s customers and creditors.
The relationship between FTX, Alameda, and BlockFi was complex and intertwined. BlockFi had obtained a $400 million line of credit from FTX, while FTX, operating under the legal name West Realm Shires, was among BlockFi’s major creditors with a $275 million claim.
The negotiated agreement is hailed as a favourable outcome for BlockFi and its customers, surpassing initial expectations. Importantly, it redirects funds earmarked for litigation with FTX towards customer distributions, ensuring a more favourable resolution for all parties involved.