Bankrupt cryptocurrency lender BlockFi has reached a $874.5 million in-principle settlement with FTX and Alameda Research estates, according to a Wednesday bankruptcy court filing.
The settlement is subject to approval by U.S. Bankruptcy Judge John Dorsey in Wilmington, Delaware.
FTX vs. BlockFi Case History
BlockFi and FTX had sued each other in 2023, seeking to recover money they had loaned each other before they both went bankrupt in November 2022. Under the new settlement, FTX agreed to prioritize a $250 million payment to BlockFi, and the remainder of the settlement is contingent on its efforts to repay its own customers in bankruptcy.
The companies had a close relationship before a 2022 market crash revealed FTX’s widespread misuse of customer funds. BlockFi provided loans to FTX’s affiliated hedge fund Alameda Research, and it turned to FTX for rescue financing during a volatile cryptocurrency market in summer 2022.
Possible Settlement Agreed in US Court
FTX could pay BlockFi up to $689 million on account of the Alamexa loans, but only the first $250 million is guaranteed. The remainder is contingent on FTX’s ability to first repay its own customers and other creditors, according to court documents filed in Delaware and New Jersey bankruptcy courts.
FTX also agreed to pay BlockFi an additional $185.3 million, to account for the amount that BlockFi held in its FTX trading accounts when the cryptocurrency exchange collapsed in 2022.
FTX expects to fully repay its own customers, but that result is not guaranteed, an FTX attorney said in January.
BlockFi customers are expected to receive the claims at full value, as long as FTX meets its distribution goals, the filing said.
