Courts Approve Crypto Lending Platform, BlockFi, Restructuring

BlockFi, a crypto lending platform, had undergone bankruptcy a while ago. This, of course, has meant that it had to come up with a plan to pay back its customers following liquidation. The courts did not approve of earlier restructuring plans, but BlockFi has finally found a solution a judge approves of. This step means that investors finally see a way forward and have at least a little relief.

Judge Michael Kaplan, specialising in bankruptcy, gave the go-ahead for the firm to pay back its customers. The official in charge of restructuring, Mark Renzi, also approves of this proposal. Now crypto lending platform has to write a list of those it owes funds to, its investors, and the amounts it owes. Most importantly, they will have to note down the 50 largest credits with secured loans.

BlockFi’s Legal Battle with FTX and Crypto Industry Impact

The firm presented its initial restructuring plan on November 28th. The court had problems with these proposals and sent them back to come up with an update to this plan. On September 14th, the lawyer for FTX also had issues with their more recent plan. He stated the plan was unfair to the claims FTX held. However, the courts ignored this plea and went ahead with the new scheme.

FTX also went through bankruptcy recently, meaning it also opened up issues for BlockFi. BlockFi already had exposure to this crypto firm.

The firm decided to stop any BlockFi withdrawals on the same day that FTX filed for bankruptcy. Those lending to FTX accuses the BlockFi CEO of knowingly blocking funds from FTX. According to this, then, this move had implications for FTX investors.

BlockFi’s legal struggle against FTX may then have further implications for the current restructuring plan. If it wins against FTX and other similar firms, then it will go ahead with this scheme. We will see what implications this has for others in the crypto lenders or crypto banks in the industry.