In a further setback for BlockFi, the bankrupt crypto lender is encountering significant opposition from FTX regarding its proposed bankruptcy plans. BlockFi has been grappling with financial difficulties, struggling to meet its obligations to creditors and customers. FTX, a prominent cryptocurrency exchange, has recently filed legal objections, accusing BlockFi of abusing the planning process and attempting to evade substantial claims against the defunct company.
FTX argues that BlockFi’s newly proposed plan, the Liquidating Plan, dated June 28, 2023, aims to make FTX’s claims disappear without adhering to basic procedural fairness and due process requirements. FTX alleges that BlockFi is abusing the plan process, hoping to waive the FTX Debtors’ claims using some sort of “bankruptcy wand.” This latest filing by FTX poses a significant hurdle for BlockFi’s bankruptcy proceedings.
Moreover, FTX’s objections extend beyond the repayment issues and collateral related to a loan with its sister trading arm, Alameda Research. FTX points out that BlockFi may also have claims against FTX, which the latter’s legal team is expected to dispute. This raises the complexity of the bankruptcy case as it involves multiple parties with overlapping claims and counterclaims.
FTX is not the only entity opposing BlockFi’s bankruptcy plans. Three Arrows Capital (3AC), a Singapore-based crypto hedge fund, has also voiced its opposition, claiming that BlockFi owes it more than $220 million. 3AC had previously argued that it was not given the opportunity to challenge fraud allegations. Its liquidators are seeking to recover a substantial amount, totaling $1.3 billion, from the founders of BlockFi.
The mounting opposition from FTX and 3AC signifies the difficulties BlockFi faces in finding a viable path forward in its bankruptcy proceedings. The objections raised by these influential players in the cryptocurrency industry raise questions about the legitimacy and fairness of BlockFi’s proposed liquidation plan.
These developments highlight the importance of procedural fairness and due process in bankruptcy cases. The concerns raised by FTX and 3AC necessitate a thorough review of BlockFi’s bankruptcy plan and the claims made by all parties involved. The outcome of this legal battle will not only determine the fate of BlockFi but also set important precedents for future cryptocurrency-related bankruptcies.
As the bankruptcy proceedings continue, it remains to be seen how BlockFi will navigate the mounting opposition and address the claims brought against it. The involvement of prominent players like FTX and 3AC adds complexity and significance to the case, drawing attention from the wider cryptocurrency community.