The Saga Continues: Creditors Strike Back

Just when you thought the BlockFi saga couldn’t get any more dramatic, disgruntled creditors have thrown down the gauntlet in a new court filing. It appears they aren’t just going to sit back and watch while BlockFi attempts to navigate its Chapter 11 reorganization plan like a ship lost at sea.

BlockFi’s Financial Fumble

On May 12, BlockFi attempted to present a glimmer of hope with its restructuring plan filed in the United States Bankruptcy Court in Trenton, New Jersey. However, the firm quickly soured the mood by stating that selling the company might not yield sufficient resources to satisfy the 50 creditors to which it owes nearly a staggering $1.3 billion. Yikes!

Delay Tactics? Creditors Cry Foul

On May 15, the creditors responded with their own court filing, alleging that BlockFi had deliberately postponed proceedings. Brown Rudnick, the law firm representing the creditors, is leaving no stone unturned. They pointed out that BlockFi allegedly sold approximately $240 million worth of cryptocurrency before declaring bankruptcy in late November 2022. And guess what? They managed to do it “at the nadir,” right when the market decided to throw a tantrum after the FTX collapse.

Bad Decisions and Baffling Moves

• Creditors argue that a massive pre-petition liquidation wasn’t just poor timing, it cost them an estimated $100 million.
• They cited “unnecessary and undesired tax consequences”—talk about kicking someone while they’re down!
• Additionally, BlockFi forked over $22.5 million of customer funds to snag a $30 million insurance policy, just after unloading those digital assets.

A Call for Change

The creditors are calling on the court to expedite the process and transfer the estate’s assets to a competent new management team. They argue that the current agenda from BlockFi feels like a farcical play that just won’t end, rather than a serious legal proceeding aimed at resolving the chaos left in the wake of their financial misconduct.

The Radio Silence from BlockFi

As of now, BlockFi seems to be playing a game of “let’s see how long we can stay quiet.” They have yet to respond to inquiries from media outlets about the unfolding situation, leaving everyone on the edge of their seats. Will they address these serious allegations, or are they quietly hoping this all blows over?

Stay tuned as the tale of BlockFi evolves—it’s bound to keep us all entertained.