BlockFi Reaches Settlement wth FTX and Alameda 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 court documents filed on Wednesday, 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.

Source: CoinDesk