January 10, 2023

BlockFi Repaid $15 Mln to Investor to Settle Crypto Lawsuit

BlockFi

BlockFi

Bankrupt crypto lender BlockFi Inc. repaid $15 million to an investor to settle for a threatened lawsuit over the company’s cratering equity value in the summer of 2022, BlockFi attorneys said at a bankruptcy court.

BlockFi attorney Joshua Sussberg said at a bankruptcy court hearing in Trenton, New Jersey, that the investor, identified as “Counterparty A” claimed that he had bought equity shares that were issued as part of executive compensation packages.

These shares were valued at $6 billion to $8 billion when the company bought them in January 2022, but their value declined due to the collapse of FTX and the bearish crypto market. Therefore Counterparty A threatened to sue BlockFi and its executives, accusing them of being non-transparent about the disturbances in the crypto market, Sussberg added.

BlockFi believed that Counterparty A’s allegations were specious, but it had reached a confidential agreement with him, repaying him $15 million on August 23. In this settlement, BlockFi founder Zac Prince made the largest payment with $6.144 million.

The New Jersey-based crypto lender filed for bankruptcy protection on November 28, following the FTX collapse and laid off 20% of its employees after its value was down.

Moreover, BlockFi said in a Twitter thread that it will file both its Schedules of Assets and Liabilities and its Statement of Financial Affairs with the court on Wednesday to show its commitment to maximizing value for all clients and other stakeholders by moving forward in its chapter 11 cases expeditiously and transparently.

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