FTX opposes BlockFi’s bankruptcy plan

FTX filed an objection to BlockFi’s bankruptcy plan Wednesday

article-image

mundissima/Shutterstock modified by Blockworks

share

FTX objected to BlockFi’s bankruptcy plan Wednesday, claiming it “still suffers from certain fundamental shortcomings.”

FTX’s attorneys believe that “the Plan unfairly discriminates against the FTX Claims in certain respects” and have asked the Court to deny the plan. 

The opposition comes after BlockFi claimed it fell victim to FTX’s former CEO Sam Bankman-Fried actions. FTX is accused of misappropriating and commingling customer funds with Alameda Trading, its sister firm, in a scheme to defraud investors.

FTX is attempting to recover both loan repayments and collateral from the bankrupt crypto lender.

“The FTX Debtors do not seek to impede the BlockFi Debtors’ efforts to return value to their creditors, but, in the absence of a consensual resolution, must ensure any plan is fair to the FTX Debtors’ creditors, who are the beneficiaries of the FTX Claims,” the Wednesday filing said.

FTX argued in the Wednesday filing that the debtors for both BlockFi and FTX had attempted to work “constructively” to reach a proposal “to fairly and efficiently resolve the complex issues between the parties” due to the “dueling debtor” claims. 

A July report from BlockFi’s committee of unsecured creditors found that BlockFi was aware of the risks associated with lending to Alameda. 

“BlockFi’s reliance on Alameda/FTX led to foreseeable (actually foreseen) losses of a staggering quantum,” the report stated. FTX and Alameda defaulted on around $680 million in collateralized loan obligations.

Furthermore, BlockFi’s credit risk team allegedly drafted a memo warning that Alameda “had unaudited financials” and “was offering volatile collateral.”

However, in an August filing, BlockFi argued that FTX and Alameda’s “scheme included fraudulently inducing BlockFi to loan over $1 billion worth of digital assets deposited on the BlockFi platform to Alameda Research.”


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Permissionless is a conference for founders, application developers, and users. Come meet the next generation of people building and using crypto.

recent research

Blinks Report Image.png

Research

Blinks enable the ability to vampire attack user monetization of existing networks by inserting onchain and financialized functionalities directly within the popular social feeds and digital experiences of today.

article-image

Plus, how the FTX collapse played out in Asian countries

article-image

Kalshi founder Tarek Mansour said Thursday marked the “the first trade on regulated election markets in nearly a century”

article-image

I was excited about being on the precipice of realigning societal incentives and solving many issues plaguing our modern financial world

article-image

Cypherpunk Holdings has rebranded to Sol Strategies in a pivot to a Solana-first investment approach

article-image

BitGo’s wrapped bitcoin (wBTC) has a new custodial challenger

article-image

Make no mistake: Tether makes a ton of money. But exactly how much depends a lot on the price of bitcoin.