‘End the Extortion:’ BlockFi Creditors File to Liquidate Estate

Creditors of defunct crypto lender BlockFi person filed to liquidate the company, accusing management, including CEO Zac Prince, of “fraud,” “extortion” and “mischief” successful delaying solution of bankruptcy proceedings.

The institution is holding the lawsuit up truthful it tin negociate ineligible releases for its elder management, who are culpable for loans made to FTX’s Alameda Research, a committee representing BlockFi’s unsecured creditors said successful a document filed successful the New Jersey Bankruptcy Court precocious Tuesday evening.

“It is clip to extremity each of this,” the creditors’ filing said, adding that, dissimilar different cases of alleged crypto wrongdoing, specified arsenic Sam Bankman-Fried’s FTX, “BlockFi customers bash not yet cognize their story, and this is facilitating lawsuit mischief … It is clip for the Court to bid an extremity to the pain and, thereby, extremity the extortion tactics.”

The creditors notation to an investigative study into activities astatine the company, antecedently filed nether seal, which they accidental “reveals, successful large detail, that BlockFi (Mr. Prince successful particular) perpetrated a fraud connected customers.”

“The mediation is over; negotiations are over,” the filing said, arguing that BlockFi was taking unfair vantage of its ineligible monopoly connected proposing a mode retired of bankruptcy. “This lawsuit is simply a liquidation. There is nary revenue.”

With administrative costs of $16 cardinal per month, “the Debtors proceed paying, among different things, the salaries to much than 100 individuals – galore of whom, to the champion of our knowledge, person had small to bash but enactment connected their play game,” the filing said.

In parallel with the creditors’ filing, BlockFi filed an updated program under Chapter 11 of the bankruptcy code. An amended disclosure statement suggests that holders of BlockFi involvement accounts, collectively owed astir $1 billion, tin expect to retrieve betwixt 39% and 100% of their assets nether the bankruptcy plan, arsenic against 36%-60% if assets are simply liquidated.

Counsel for BlockFi did not instantly respond to CoinDesk’s petition for comment.