News

BlockFi Creditors Hotly Controversy About Poor Management Of The Company

Key Points:

  • A brawl erupted between BlockFi’s lender and the insolvent digital asset management.
  • Creditors said it was the company’s conversion of crypto to fiat during the crash that caused their funds to be lost.
  • They also said that it was the company’s poor management process that caused and was a victim of FTX and Alameda.
The creditors dismissed BlockFi’s claim that it was a victim of FTX and Alameda as a false case narrative, blaming the company’s downfall on bad management choices and, later, restructuring agents.
BlockFi Creditors Hotly Controversy About Poor Management Of The Company 2

The creditor’s committee said that in the days after the FTX collapse, when crypto markets crashed, BlockFi transferred around $240 million in crypto into fiat, resulting in severe financial losses and probable tax concerns for clients. BlockFi subsequently transferred the money as well as an extra $10 million into Silicon Valley Bank (SVB), which went bankrupt later that year.

“SVB was not a depository institution of sufficient strength to meet the Bankruptcy Code’s protective requirements, prompting the United States Trustee to object to estate money being deposited there,” the filing showed.

But, no one at BlockFi, including the restructuring team, followed through on this, and no bond was issued, according to the creditors. The creditors claimed that BlockFi also used consumer cash to obtain a $30 million insurance policy for its directors and executives.

Bitcoin has risen more than 60% from the November 2022 lows, and creditors claim that approximately $100 million in value was lost as a result of the decision to liquidate then. A significant chunk of this document has been deleted, notably critical passages in which the creditors explain why they feel the BlockFi team participated in a false case narrative.

On Thursday, a court gave BlockFi permission to refund $297 million to clients with non-interest-bearing accounts without paying users who sought to move funds into such accounts at the last minute.

Although the company received $4.7 million from the sale of mining equipment, considerable recoveries are dependent on the firm’s claims against Alameda and FTX, with around $355 million in cryptocurrencies locked on FTX and a $671 million debt to FTX’s subsidiary, Alameda Research.

Earlier, BlockFi said in its wind-down plan filed with the United States Bankruptcy Court for the District of New Jersey that the success or failure of the litigation supporting these allegations would affect consumers who are waiting for their money returned by more than $1 billion.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your research before investing.

Join us to keep track of news: https://linktr.ee/coincu

Harold

Coincu News

Harold

With a passion for untangling the complexities of the financial world, I've spent over four years in financial journalism, covering everything from traditional equities to the cutting edge of venture capital. "The financial markets are a fascinating puzzle," I often say, "and I love helping people make sense of them." That's what drives me to bring clear and insightful financial journalism to the readers of Coincu.

Recent Posts

Best Altcoins to Buy Today: Qubetics Rides 1000x Potential to Hit $2.6M, Ethereum Stays Rangebound, Tron USDT Transactions Hit $52B

Discover the best cryptos to buy and hold today: Qubetics leads with 1000x potential, Ethereum…

2 hours ago

Trump Media Company Is Pushing New Venture For Crypto Service

With the platform facing a cracked whip, Trump Media company is expanding into new business…

3 hours ago

Crypto Advisory Council Now A White House Position Attracting Leaders

Major crypto firms, including Ripple, Kraken, and Circle, are competing for spots on President-elect Donald…

3 hours ago

Analyst Sounds Major Breakout Alert Amid Shiba Inu, WallitIQ, And Dogecoin Price Recoveries

Analysts highlight a breakout alert as Shiba Inu (SHIB), and Dogecoin show signs of recovery…

4 hours ago

SEC Chair Gary Gensler Will Lose Power From January 20

SEC Chair Gary Gensler will step down on January 20, 2025, coinciding with President-elect Donald…

4 hours ago

MicroStrategy Convertible Notes Now Out of Stock With $3B Raised

The MicroStrategy convertible notes offering, initially set at $1.75 billion, was increased to $2.6 billion…

4 hours ago

This website uses cookies.