Crypto Lender’s Desperate Dance with DOJ

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  • A judge’s benevolent smile: $35M BlockFi-DOJ settlement approved 🤑
  • BlockFi’s previous tango with FTX and Alameda: an $875M settlement 💸
  • A debt of $10B: BlockFi’s unfinished waltz with creditors like Three Arrows Capital 💔

As the curtains draw on BlockFi’s bankruptcy saga, a new chapter unfolds. The US Department of Justice (DOJ) and BlockFi’s bankruptcy administrator have agreed to settle a lawsuit over a $35 million crypto asset transfer. Judge Michael B. Kaplan of the US Bankruptcy Court for the District of New Jersey has given his blessing, and the settlement is now a done deal 🙏.

A Previous Engagement: BlockFi’s $875M FTX and Alameda Settlement

In May 2023, the lawsuit was filed, and the DOJ requested that BlockFi hand over 35 million crypto assets to the US government. The money was linked to two Estonian citizens’ accounts, who were embroiled in a separate case of fraud 🤑. The DOJ claimed it was entitled to take these assets using valid warrants, but BlockFi’s members argued that the bankruptcy court should oversee the transfer 🤔.

This is not the first time BlockFi has danced with controversy. In March 2023, the company agreed to pay the estates of FTX and Alameda Research a whopping $875 million 💸. This agreement closed with about 1 billion worth of claims between the firms 📊.

An Unfinished Waltz: BlockFi’s $10 Billion Debt

According to BlockFi’s CEO, Zac Prince, the company’s woes were a direct result of the actions of FTX’s Lending CEO, Sam Bankman-Fried 🤦‍♂️. The Chapter 11 plan of BlockFi was approved in September 2023, enabling the company to begin restoring its 10,000 or more creditors 🙌. However, BlockFi still owes a staggering $10 billion to over 100,000 creditors, including hedge fund Three Arrows Capital and other large investors 📈.

As BlockFi takes another step towards resolving its bankruptcy case, the crypto community watches with bated breath. Will new rules and improved risk management prevent similar problems in the future? 🤔 Only time will tell. For now, BlockFi’s clients await the size of their compensation, once the company completes its liquidation process 🕰️.

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2025-07-13 00:26