BlockFi argues FTX, Three Arrows Capital aren’t entitled to repayments

Bankrupt cryptocurrency lender BlockFi is trying to artifact attempts by the likewise bankrupt FTX and Three Arrows Capital (3AC) that purpose to retrieve hundreds of millions of dollars to wage backmost their creditors.

BlockFi claimed successful an Aug. 21 filing to a New Jersey bankruptcy tribunal that its ain creditors shouldn’t beryllium pushed to the backmost of the enactment due to the fact that FTX’s creditors were harmed by the speech allegedly misappropriating $5 cardinal BlockFi lent it.

“FTX seeks to retrieve connected implicit $5 cardinal of claims filed against the BlockFi estates astatine the nonstop disbursal of the eventual victims of FTX’s fraud: BlockFi’s clients and different morganatic creditors.”

“To forestall further injustice to the creditors of BlockFi’s estates, the Court should disallow the FTX Claims nether the doctrine of unclean hands,” BlockFi added.

FTX besides provided $400 cardinal to BlockFi successful June 2022 successful summation to buying BlockFi equity pursuant to a indebtedness agreement, the filing stated.

However, BlockFi claimed it wasn’t a modular indebtedness statement — it was an unsecured, 5-year word that was good beneath marketplace involvement rates and repayments weren’t owed until the steadfast would supposedly mature.

BlockFi referred to FTX’s concern arsenic a “gamble” that BlockFi creditors shouldn’t beryllium liable for.

“Just due to the fact that FTX’s fraudulent actions caused FTX’s stake to neglect does not mean BlockFi’s creditors are present someway liable to refund the acquisition price,” it argued.

BlockFi suggested a loan from FTX was a “gamble” that the marketplace would stabilize. Source: Kroll

Estimates amusement BlockFi owes up to $10 cardinal to implicit 100,000 creditors, including $1 cardinal to its 3 largest creditors and $220 cardinal to bankrupt crypto hedge money 3AC.

BlockFi claimed 3AC committed fraud with the wealth it borrowed and argued it besides shouldn’t beryllium entitled to a imaginable repayment.

BlockFi claims its litigation with FTX, 3AC and different firms could outgo it up to $1 cardinal — impacting the magnitude its creditors are owed.

Related: BlockFi opens crypto withdrawals for eligible US users pursuing tribunal order

Several BlockFi creditors antecedently accused the steadfast of overlooking respective reddish flags earlier transacting with FTX and its trading steadfast Alameda Research successful the months anterior to FTX’s illness successful November 2022.

Despite this, creditors settled with BlockFi past period to determination guardant with a repayment plan.

BlockFi filed for Chapter 11 bankruptcy connected Nov. 28, astir 2 weeks aft FTX likewise filed for bankruptcy.

Collect this nonfiction arsenic an NFT to sphere this infinitesimal successful past and amusement your enactment for autarkic journalism successful the crypto space.

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