SEC Agrees To Delay $30M Fine From Bankrupt BlockFi Until Investors Are Repaid
June 23 (Cointime) - The SEC has agreed to delay a $30 million fine against BlockFi until after investors are repaid, according to a court filing. The fine is part of a $50 million penalty owed by BlockFi to the regulator for failing to register its crypto lending product. The SEC agreed to forego the payment in order to maximize the amount that can be distributed to investors and avoid delays. BlockFi filed for bankruptcy in November 2021 after the collapse of FTX, and its customers are among the first creditors in line to receive payment.
BlockFi Sues Connecticut Banking Commissioner Over License Surrender Refusal
BlockFi, a bankrupt cryptocurrency lender, has taken legal action against Connecticut Banking Commissioner Jorge Perez in the U.S. Bankruptcy Court of New Jersey. The company has been trying to surrender its Connecticut money transmitter license since December 2020, but the regulator has been insisting on an administrative proceeding.
BlockFi to Perform Updates Before Distributing Funds to Users
BlockFi, the bankrupt lending platform, has announced that it needs to perform updates before it can distribute funds to users. The company stated that a court order on June 9th allowed for certain withdrawals, but upgrades are necessary to conduct withdrawals accurately and safely.
Companies Seek Further Guidance on Proposed Changes to Crypto Asset Reporting
Kraken, Ernst and Young, and BlockFi are among the companies requesting further guidance on proposed changes to crypto asset reporting by the Financial Accounting Standards Board (FASB). Kraken specifically requested guidance on stablecoins, wrapped tokens, and NFTs.
BlockFi Corrects Premature Statements About Bankruptcy Reorganization Plan
BlockFi has issued a corrective letter stating that statements about a bankruptcy reorganization plan should be disregarded. The letter was issued following an order by the U.S. Bankruptcy Court for the District of New Jersey and stated that certain statements were prematurely posted to the court docket, website, and Twitter feed.
BlockFi's Fund Recoveries Depend on Claims Against Alameda and FTX, Court Filings Show
According to court filings from Friday, the success or failure of BlockFi's claims against commercial counterparties such as FTX and Alameda will heavily impact fund recoveries for clients and creditors of the bankrupt crypto lender. The wind-down plan filed to the U.S. Bankruptcy Court for the District of New Jersey outlined a list of projected recoveries, but the actual recoveries received by clients may differ materially from these figures. BlockFi has around $355 million in crypto frozen on FTX and another $671 million in a loan to FTX's trading arm Alameda Research, which are also going through chapter 11 wind-down proceedings in Delaware. A hearing on the plan is scheduled for June 20.
BlockFi's Recovery Hinges on Claims Against FTX and Alameda, Court Filings Show
According to court filings, BlockFi's ability to recover funds for its clients and creditors affected by the bankruptcy of crypto lender BlockFi will heavily rely on its claims against its commercial counterparties, FTX and Alameda. The success or failure of these legal actions could result in a difference of over $1 billion for clients eagerly awaiting the return of their money. BlockFi's wind-down plan outlined projected recoveries, including approximately $1.06 billion from the liquidation of BlockFi Inc. Interest Account Claims, $216 million from BlockFi Lending LLC Private Client Account Claims, and $371 million from BlockFi International Ltd. Private Client and Interest Account Claims. However, the actual recoveries received by clients might deviate significantly from these estimated figures.
BlockFi Custodial Customers to Receive $300M in Repayment, While BIA Holders Risk Losing Investment to Company’s Creditors
BlockFi's custodial wallet users may receive a repayment of $300 million from the bankrupt digital asset lender, as a New Jersey judge ruled that the assets locked in BlockFi’s custodial accounts belong to clients rather than the company’s estate. However, the judge also ruled that another $375 million that users sought to transfer from interest-bearing accounts following November’s withdrawal suspension still belong to BlockFi. The judge spared custodial wallet holders from the same fate as BlockFi's interest-bearing account (BIA) customers, who risk losing their investment to the company's creditors. The bankruptcy laws support the immediate return of funds belonging to customers rather than having said funds divided up among the company’s estate’s creditors.
BlockFi Gets Few More Weeks To Find Bankruptcy Exit Plan
Cryptocurrency lender BlockFi has been granted until May 15 to file its bankruptcy exit strategy. The company filed for bankruptcy in November 2022, and is now exploring potential asset sales and external backers for a restructuring deal. BlockFi's lawyers said the company would have a plan ready for assessment by unsecured creditors within two weeks of the extension. The company owes more than $10bn to more than 100,000 creditors.
U.S. Judge Sets Final Deadline For BlockFi’s Reorganization Plan
On Wednesday, the deadline for the cryptocurrency platform BlockFi Inc. to file its Chapter 11 or reorganization plan has been extended to the middle of the following month by a bankruptcy judge in the state of New Jersey.
