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FTX Trading secures court approval of settlement with BlockFi
By Sarah Lizee
Olympia, Wash., Oct. 20 – FTX Trading Ltd. received approval of a settlement with BlockFi Inc., according to an order filed Thursday with the U.S. Bankruptcy Court for the District of Delaware.
The settlement agreement resolves venue and jurisdictional disputes between FTX and BlockFi without costly litigation, FTX said.
The company said it also provides stay relief for the FTX debtors and a process to resolve all avoidance claims and defenses by and among the parties and preserves all of the FTX debtors’ claims against the BlockFi debtors to be used defensively in merits litigation on the BlockFi debtors’ claims against the debtors centralized in the Delaware court.
The settlement agreement also includes the withdrawal with prejudice of the BlockFi debtors’ estimation motion concerning the FTX claims and merits objection to the FTX claims filed in the New Jersey bankruptcy court, and provides appropriate treatment of the claims of FTX affiliate West Realm Shires Inc. against the BlockFi debtors by granting West Realm Shires an allowed unsecured subordinated claim against each of BlockFi Inc., BlockFi Trading LLC and BlockFi Lending LLC in the amount of $275 million.
In exchange, the FTX debtors will waive rights to any affirmative distribution from the BlockFi debtors on account of the FTX avoidance claims – which are asserted as unliquidated claims in the aggregate amount of $212 million, and, if successful would result in a replacement claim against the FTX debtors – but will be entitled to assert the claims as defenses, counterclaims and setoffs to the much larger BlockFi claims asserted against the FTX debtors.
FTX has headquarters in the Bahamas and filed Chapter 11 bankruptcy on Nov. 11, 2022 under case number 22-11068. Based in Jersey City, N.J., BlockFi is a crypto financial services company. The company filed bankruptcy on Nov. 28, 2022 under Chapter 11 case number 22-19361.
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