Bankrupt crypto firms BlockFi and FTX have reached an “in principle” agreement to settle their disputes, with FTX agreeing to pay up to $874.5 million to BlockFi and drop its claims against the firm, as per a March 6 court filing.
The terms of the settlement are subject to approval by U.S. Bankruptcy Judge John Dorsey in Wilmington, Delaware.
The settlement would resolve BlockFi’s claims against FTX, amounting to approximately a billion dollars. FTX will also waive “millions of dollars of avoidance claims and other counterclaims” against BlockFi.
The $874.5 million comprises a $185.2 million claim against FTX.com, representing the value of BlockFi customer assets held on the exchange, and a $689.3 million claim against Alameda Research for the loans it received from BlockFi.
$250 million of the total sum will be treated as a “secured claim,” prioritizing payment to BlockFi after FTX emerges from bankruptcy. The remaining amount is contingent upon FTX first repaying its customers and other creditors.
BlockFi’s bankruptcy administrators laud the settlement as a result of “early mediation,” reducing litigation costs and ensuring funds earmarked for litigation with FTX are directed towards customer distributions.
BlockFi filed for Chapter 11 bankruptcy protection on Nov. 28, 2022, citing exposure to the collapse of FTX earlier that month. Both companies had sued each other in 2023 over disputes regarding outstanding debts and collateral.
BlockFi owes up to $10 billion to over 100,000 creditors, including $1 billion to its three largest creditors and $220 million to bankrupt crypto hedge fund, Three Arrows Capital.
BlockFi emerged from bankruptcy in October 2023 and opened a wallet to facilitate customer withdrawals. Customers who used interest-bearing BlockFi accounts are expected to withdraw some assets in 2024, although the exact payout remains unclear.
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