In a bold move to find a resolution in the ongoing bankruptcy saga, creditors of the now insolvent cryptocurrency lender, BlockFi, have initiated a liquidation process.
They accuse Zac Prince, the CEO of BlockFi, and his team of employing delay tactics in the bankruptcy proceedings, alleging charges of “fraud,” “extortion,” and “mischief.”
According to the creditors, BlockFi’s stalling is an attempt to negotiate legal safeguards for its senior management, who, they argue, hold responsibility for loans issued to Alameda Research, an entity of FTX. This perspective was shared in a recent document submission to the New Jersey Bankruptcy Court.
“BlockFi customers do not yet know their story, and this is facilitating case mischief … It is time for the court to order an end to the burn and, thereby, end the extortion tactics” the document read.
An exhaustive investigative report, initially filed confidentially, allegedly discloses BlockFi and particularly Mr. Prince’s fraudulent actions toward customers.
They further highlighted the unsustainable $16 million monthly administrative costs, sarcastically remarking on the salaries paid to over 100 employees who have little to do but improve their golf skills.
Also Read: Bankrupt BlockFi to Liquidate Crypto Lending Platform
Meanwhile, BlockFi, concurrently with the creditors’ filing, submitted an updated Chapter 11 bankruptcy plan. An adjusted disclosure statement indicates that holders of BlockFi interest accounts, due around $1 billion, may potentially retrieve between 39% and 100% of their assets under the bankruptcy plan, in contrast to a mere 36%-60% if the assets are liquidated.
