Cryptocurrency firms BlockFi and FTX have tentatively resolved their disputes, with FTX agreeing to pay BlockFi up to $874.5 million, as stated in a court filing on March 6.
The terms are subject to approval by Judge John Dorsey from the U.S. Bankruptcy Court in Delaware. The settlement restores BlockFi’s claims worth around $1 billion against FTX, which also withdraws “millions of dollars” in counterclaims.
With regards to the settlement, $185.2 million is allotted to a claim against FTX.com, corresponding to BlockFi customer assets, and $689.3 million to a claim against Alameda Research for loans received.
The agreement designates $250 million as a secured claim for BlockFi, with the rest of the amount of the claim being dependent on FTX’s plan to pay customers and other creditors. In return, FTX will drop its claims against BlockFi.
The bankruptcy administrators claim that this early mediation reduced the litigation costs and the money goes directly to customer distributions.
Kenneth Aulet, partner at Brown Rudnick, which represented the Committee of Unsecured Creditors, said “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.”
BlockFi filed for Chapter 11 in November 2022, mentioning FTX’s collapse as one of the reasons. Even with the deal, BlockFi may have to pay up to $10 billion to more than 100,000 creditors, including $1 billion to its three largest creditors and $220 million to Three Arrows Capital, a bankrupt crypto hedge fund.
The settlement between BlockFi and FTX marks a significant step towards resolution, potentially mitigating losses for both parties and offering hope for creditors amidst the complex crypto landscape.
Also Read: FTX Issues Warning on Unauthorized Bids Amid Bankruptcy Proceedings
