A US court has moved swiftly to clear a $13-million settlement in the BlockFi investor lawsuit, signaling long-awaited relief. In a Thursday filing, Judge Claire Cecchi of New Jersey ordered BlockFi’s insurers to deposit the funds into escrow within 30 days. The decision followed months of delay caused by objections from an investor. A final approval hearing will now take place on December 11.
This decision addresses claims made by over 89,000 BlockFi customers who had interest-bearing accounts from March 2019 to November 2022. The corporation was charged in the 2023 class-action lawsuit of marketing unregistered securities and deceiving investors by having senior officials make false representations on multiple occasions.
Investor Claims and Bankruptcy Fallout
The complaint, which was led by Trey Greene, says the CEO Zac Prince and COO Flori Marquez ignored the warnings from their risk team. They are alleged to have made loans to Alameda Research, which contributed to BlockFi’s collapse during the market crash of 2022.
As a result, the company filed for bankruptcy after the Terra collapse set off a chain reaction of failures at Celsius, Voyager, and FTX.
Besides the settlement, BlockFi has been attempting to repay customers under its Chapter 11 plan. Last year, the company secured an $875-million agreement with FTX and Alameda to resolve disputes.
Moreover, it has promised to complete final distributions to creditors, although significant amounts remain unclaimed. In April, the BlockFi Estate confirmed on X: “There are still significant amounts of USD and crypto that have not been claimed by customers.”
Wider Industry Crackdown
The BlockFi case comes as regulators and law enforcement tighten oversight of crypto-related misconduct. Interpol revealed this week that Operation Serengeti 2.0 dismantled 25 illegal crypto mines in Angola. The raid seized $37 million in equipment and shut down 45 illicit power stations.
Additionally, authorities have apprehended over 1,200 cybercriminals who were targeting around 88,000 victims across the globe.
The recent BlockFi settlement shows that courts demand accountability, while regulators ramp up their initiatives to address the dangers associated with risky crypto practices.
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