It has reached a settlement to oversee Blockfi’s bankruptcy blowout, oversee the US Department of Justice (DOJ) and dismiss a $35 million cryptocurrency transfer lawsuit involving Crypto Lender.
The deal was approved Friday by Judge Michael B. Kaplan of the U.S. Bankruptcy Court for the District of New Jersey, according to court filings.
The lawsuit, filed in May 2023, attempted to transfer more than $35 million in crypto assets from Bullocke to the US government. The DOJ said there is a warrant to seize funds from the Blockfee accounts of two Estonian citizens in a criminal fraud case unrelated to Blockfi’s bankruptcy.
At the time, the DOJ argued that the US Bankruptcy Court for the District of New Jersey did not have jurisdiction to prevent the transfer of assets. The dispute occurred during Blockfi’s bankruptcy proceedings.
Related: California revokes Blockfi loan license two years after bankruptcy
The case was rejected due to bias
Under the provisions agreed by the parties, the case was dismissed on prejudice. That is, it cannot be reconsidered. Each party will bear its own legal costs and expenses as part of the settlement.
Mohsin Meghji, planning manager for the property falling in the wind of Blockfi, represented the crypto company in the incident. The Department of Justice was represented by Senior Court Advisor Seth B. Shapiro and his team in the Commercial Litigation Division of the Citizens’ Division.
Last May, Blockfi announced plans to partner with Coinbase to close its web platform while helping clients withdraw the remaining funds. Eligible users, including Blockfi interest accounts, retail loans, and private client accounts, can use Coinbase for withdrawals.
The company declared bankruptcy in November 2022 after FTX collapsed, and subsequently set a withdrawal deadline of April 28, 2024, in order for customers to regain crypto holdings.
Related: Blockfi and 3AC payment transactions get judge Go-Amead but remain sealed
Blockfi reaches settlement with FTX
Last March, Blockfi also reached a $875 million settlement with FTX and Alameda Research Estates, settling a claim of about $1 billion. CEO Zac Prince testified that the actions of FTX founder Sam Bankman-Fried directly caused Blockfi’s bankruptcy.
The Bankruptcy Court approved Blockfi’s Chapter 11 plan in September 2023 to repay more than 10,000 creditors. Blockfi owes about $10 billion to more than 100,000 creditors, including large debts to its top three creditors and bankrupt hedge fund Three Arrows Capital.
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