Bankrupt crypto lender BlockFi is reportedly trying to block attempts by FTX and Three Arrows Capital (also bankrupt) to retrieve millions of dollars to pay back their creditors.
BlockFi has claimed that, by its estimates, legal battles with FTX and Three Arrows Capital could cost its customers up to $1 billion.
BlockFi Looks To Stop FTX And 3AC Repayment
BlockFi claimed in a 21st August filing at the New Jersey bankruptcy court that its own creditors must not be pushed to the back of the line because FTX’s creditors were harmed thanks to the exchange allegedly misappropriating the $5 billion that BlockFi had initially lent it. In an attempt to safeguard the interest of its creditors, BlockFi has stated it will actively look to block attempts by FTX and Three Arrows Capital to claw back billions to pay off their own creditors. The crypto lender argued that its bankruptcy directly resulted from the fraud perpetrated by FTX and 3AC. BlockFi stated in its filing,
“FTX seeks to recover on over $5 billion of claims filed against the BlockFi estates at the direct expense of the ultimate victims of FTX’s fraud: BlockFi’s clients and other legitimate creditors. To prevent further injustice to the creditors of BlockFi’s estates, the Court should disallow the FTX Claims under the doctrine of unclean hands.”
FTX had also given $400 million to BlockFi in June 2022 in an attempt to remedy the situation. This was in addition to purchasing BlockFi equity pursuant to a loan agreement, the filing added. However, BlockFi has stated that this was not a standard loan agreement. Instead, the crypto lender has stated that it was an unsecured, 5-year term which was also well below market rates. It further added that repayments were not due until the firm would supposedly mature.
BlockFi called FTX’s investment a gamble, one that BlockFi’s creditors should not be held liable for. BlockFi stated in its argument,
“Just because FTX’s fraudulent actions caused FTX’s bet to fail does not mean BlockFi’s creditors are now somehow liable to refund the purchase price.”
BlockFi Owes Billions To Creditors
Several estimates have shown that BlockFi reportedly owes up t
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Author: Amara Khatri
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