A United States judge approved a settlement resolving disputes between crypto lender BlockFi and defunct crypto hedge fund Three Arrows Capital (3AC).
During a hearing on February 6, New Jersey Bankruptcy Court Judge Michael Kaplan sanctioned the agreement to halt further legal battles. BlockFi claimed 3AC owed $129 million, while 3AC argued BlockFi owed $280 million.
Judge Kaplan rejected the U.S. Trustee’s objection to unsealing the agreement, stating it would contradict the purpose, and countered the argument of the Trustee that the terms should be disclosed due to a lack of justification from the debtors.
BlockFi’s request to seal specific information emphasized the commercial sensitivity of the terms and their potential impact on litigation involving the bankrupt crypto exchange FTX.
The court agreed to keep the details confidential to safeguard the strategies involved in settling and to uphold respect for the ongoing foreign bankruptcy proceedings of 3AC.
With the settlement now authorized, BlockFi can proceed with distributing assets from the lending estate to its creditors, which was a primary reason for seeking expedited approval.
In September 2023, Judge Kaplan gave the green light to BlockFi’s revised Chapter 11 plan and the plan for repaying its customers as the company moved forward with its liquidation process.
At that time, estimates indicated that BlockFi had outstanding debts of potentially up to $10 billion, spread across more than 100,000 creditors. This included substantial amounts owed to its three largest creditors totaling $1 billion, as well as $220 million owed to 3AC.
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