In recently filed court documents on Friday, it was revealed that the recovery of funds for clients and creditors affected by the bankruptcy of crypto lender BlockFi would heavily depend on the firm’s claims against its commercial counterparts, namely FTX and Alameda.
BlockFi, in its wind-down plan submitted to the U.S. Bankruptcy Court for the District of New Jersey, emphasized the crucial role that litigation outcomes would play in determining the amount of funds that can be returned to clients.
According to the plan, the success, or failure of these legal actions could make a difference of more than $1 billion for clients eagerly awaiting their funds’ return.
In the filed court documents, the wind-down plan of BlockFi provided an outline of projected recoveries, including an estimated $1.06 billion from the liquidation of BlockFi Inc. Interest Account Claims, $216 million from BlockFi Lending LLC Private Client Account Claims, and $371 million from BlockFi International Ltd. Private Client and Interest Account Claims.
However, it cautioned that the actual recoveries obtained by clients could significantly differ from these projected amounts.
In a tweet that resonated across the digital landscape, BlockFi revealed the crucial factors for its economic revival. The firm confidently declared, “Amidst various influences on recoveries, our primary focus lies on two prominent forces: Alameda and FTX.” These formidable entities, widely renowned in the crypto industry, held the key to BlockFi’s redemption.
Captivating the attention of curious observers, the numbers unveiled a staggering sight. A celestial treasure trove of $355 million in cryptocurrency remained locked within the mysterious realm of FTX’s platform.
But that was merely a part of the intricate tapestry, as BlockFi had entrusted a substantial loan of $671 million to Alameda Research, the trading division of the same enigmatic entity. This complex financial web entangled BlockFi within the intricate choreography of chapter 11 wind-down proceedings unfolding in the esteemed corridors of Delaware.