BlockFi Challenges FTX and Three Arrows Capital's Attempts to Retrieve Funds in Bankruptcy Battle
Summary:
Bankrupt cryptocurrency lender BlockFi is trying to prevent FTX and Three Arrows Capital from retrieving millions of dollars to repay their creditors, claiming that FTX's alleged misappropriation of funds should not harm BlockFi's own creditors. BlockFi contends that FTX's investment was a gamble and that its failure should not make BlockFi's creditors liable for repayment. The ongoing legal battles could cost BlockFi up to $1 billion.
Cryptocurrency lender BlockFi, which is currently bankrupt, is fighting against attempts made by fellow bankrupt entities FTX and Three Arrows Capital to recover hundreds of millions of dollars in order to repay their own creditors. BlockFi argues that its creditors should not be pushed to the bottom of the priority list just because FTX's creditors were affected by the alleged misappropriation of $5 billion that BlockFi lent to the exchange. BlockFi contends that FTX is seeking to recover its claims at the expense of legitimate creditors, including BlockFi's own clients. In a filing to a New Jersey bankruptcy court, BlockFi urges the court to disallow FTX's claims due to the principle of "unclean hands" and prevent further injustice to its creditors. BlockFi also asserts that FTX's investment in the company was a risky venture and that its failure should not make BlockFi's creditors liable for repayment. BlockFi owes up to $10 billion to over 100,000 creditors, including $1 billion to its three largest creditors and $220 million to bankrupt crypto hedge fund 3AC. BlockFi claims that its ongoing legal battles with FTX, 3AC, and other firms could cost it as much as $1 billion, which would impact the amount owed to its creditors. Despite previous accusations from creditors about overlooking warning signs in its dealings with FTX, BlockFi reached a settlement with the creditors last month to proceed with a repayment plan. Both BlockFi and FTX filed for bankruptcy, with BlockFi filing for Chapter 11 bankruptcy just two weeks after FTX did the same.
Published At
8/23/2023 1:38:53 AM
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