FTX and BlockFi Resume Settlement Negotiations After Bankruptcy Court Ruling

Legal Green Light for FTX and BlockFi

In a surprising turn of events that’s more dramatic than a soap opera cliffhanger, U.S. Bankruptcy Judge Michael Kaplan has given the green light for FTX and BlockFi to communicate and negotiate their claims. This marks an end to the automatic stay that had been put in place, leaving both firms in a stalemate. Now, FTX debtors can begin waving their legal magic wands concerning the BlockFi claims.

The Financial Fallout

Both FTX and BlockFi hit the bankruptcy court’s doors in November 2022 after FTX’s spectacular collapse. BlockFi, the sidekick in this financial saga, had a hefty $355 million tied up on the FTX platform and was expecting an additional $671 million from Alameda Research. Talk about a bad investment!

The Mediation Process

The court’s order states that while FTX can assert its claims, they shouldn’t be expecting any payoff from BlockFi. The next step? Both parties are required to file for mediation in the U.S. Bankruptcy Court for the District of Delaware, with the clock ticking down to Dec. 24, 2023, when mediation must commence. It’s like a holiday gift for everyone involved…as long as everyone can play nice.

BlockFi’s Legal Drama

BlockFi’s CEO Zac Prince took the stage during former FTX CEO Sam Bankman-Fried’s trial, sharing tales of woe that led BlockFi to declare bankruptcy. With claims that if FTX had remained afloat, BlockFi could’ve weathered the storm of the crypto bear market, Prince’s testimony painted a stark picture of over a billion dollars down the drain thanks to the FTX debacle. Cue the sad violin music!

Repaying Creditors

In more upbeat news, BlockFi has been given the court’s thumbs-up to start repaying its U.S.-based Wallet customers. While withdrawals were once a distant dream, a blog post from BlockFi on Oct. 24 revealed that funds were available for nearly all Wallet customers. That’s right! After enduring what felt like a financial siege, customers are starting to see the light at the end of the tunnel—or at least a small flicker of hope.