BlockFi, Alameda, and FTX Settle for $874 Million

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  • Bankrupt BlockFi has secured an “in principle” deal with FTX and Alameda Research, potentially recovering nearly $1 billion for claimants
  • A recent court filing unveiled the payout, hinting at full value recovery for BlockFi’s customers
  • Despite a complex relationship with FTX and Alameda, including lawsuits over disputed shares, the outcome appears positive for former BlockFi customers

Bankrupt crypto lender BlockFi has reached an “in principle” deal with the estates of FTX and Alameda Research, potentially securing nearly $1 billion for its claimants. The payout, revealed in a recent court filing, could lead to full value recovery for BlockFi’s customers. BlockFi had a complicated relationship with FTX and Alameda prior to its bankruptcy in 2022, borrowing funds and filing a lawsuit over $648 million worth of disputed Robinhood shares, but it seems that the outcome could be a positive one for former customers.

Loans and Shares and All Sorts

According to the settlement, BlockFi is slated to receive $874.5 million in claims against FTX and Alameda Research, with $250 million designated as a secured claim; BlockFi borrowed $250 million from FTX in June 2022 when the crypto contagion was just beginning to take hold.

This secured claim will prioritize payment to BlockFi once FTX’s bankruptcy plan, filed in December, gains creditor approval.

Under the terms, which still need to be signed off by a judge, FTX will abandon its claims against BlockFi, enabling the resolution of BlockFi’s remaining claims. As well as borrowing funds from FTX, BlockFi sued an investment vehicle owned by FTX founder Sam Bankman-Fried in November 2022 over $648 million worth of Robinhood shares which it said should have been held over as compensation for Alameda Research defaulting on $680 million of collateralized loans earlier that month.

BlockFi Claimants Getting a Full Payout?

FTX, Alameda, and BlockFi’s complex relationship is underscored by BlockFi’s $400 million line of credit from FTX and FTX’s sizable $275 million claim as one of BlockFi’s largest creditors.

If the judge overseeing the case signs off on the settlement, that will mean that BlockFi creditors can look forward to near 100% payouts.