Table of Contents
- Settlement Deal To Stay Sealed
- BlockFi’s Motion to Seal
- Moving Forward with Distributions
- Background Context: The 3AC-BlockFi Story
BlockFi and Three Arrows Capital (3AC) have finally reached an understanding; however, the terms of the settlement are to remain sealed as per court order.
Settlement Deal To Stay Sealed
In a significant development in the legal saga between crypto lender BlockFi and defunct crypto hedge fund Three Arrows Capital (3AC), a United States judge has approved a sealed settlement agreement between the two parties.
During a hearing on February 6, New Jersey Bankruptcy Court Judge Michael Kaplan approved the settlement, which aims to end the ongoing legal disputes between BlockFi and 3AC. The decision marks a crucial step toward resolving the contentious issues that have plagued both entities.
BlockFi’s Motion to Seal
BlockFi had initially moved to seal specific aspects of the settlement, citing their potential impact on litigation related to the bankruptcy of crypto exchange FTX. The court granted this motion, recognizing the sensitivity of the information and its potential ramifications on ongoing legal proceedings.
Even after approval, Judge Kaplan upheld the sealing of the settlement details, emphasizing the need to safeguard commercially sensitive information. He dismissed objections from the U.S. Trustee, underscoring the importance of maintaining confidentiality in the interests of all parties involved.
Moving Forward with Distributions
The approval of the settlement enables BlockFi to proceed with distributions from the lending estate to creditors, a pivotal step in its journey toward resolution. This decision is crucial for BlockFi as it navigates through the complexities of its bankruptcy proceedings.
Judge Kaplan previously approved BlockFi’s amended Chapter 11 and customer repayment plan in September 2023, when the firm was cleared for liquidation.
Background Context: The 3AC-BlockFi Story
BlockFi’s bankruptcy filing in late November 2022, following the collapse of FTX, initiated a convoluted legal entanglement involving multiple parties. Estimates reveal substantial debts in the range of $10 billion owed by BlockFi to a vast array of creditors, including significant amounts to its three largest creditors and $220 million to 3AC.
The collapse of Three Arrows Capital in June 2022 further complicated matters, with BlockFi alleging fraudulent behavior on the part of 3AC and disputing its entitlement to repayment.
The settlement comes in the wake of BlockFi claiming that 3AC owed it $129 million, while 3AC countered with a claim that BlockFi owed it $280 million. With the approval of the sealed settlement, BlockFi and 3AC can now take steps toward resolving their legal disputes while protecting sensitive information.
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