U.S. Court Gives Preliminary Approval to $13M BlockFi Settlement After Objection Withdrawn
A New Jersey federal judge has moved forward with a proposed $13 million settlement between a group of investors and cryptocurrency lender BlockFi after an investor who had objected in February withdrew that challenge. The court ordered BlockFi’s insurers to deposit more than $13 million into an escrow account within 30 days as part of preliminary approval steps.
The judge set a hearing for December 11 to consider final approval of the settlement and to hear any remaining objections. Under the agreement, roughly 89,000 users who held BlockFi interest accounts between March 2019 and the company’s bankruptcy filing in November 2022 would be eligible for distributions.
The class-action suit was filed following BlockFi’s 2022 bankruptcy and accuses the company of offering unregistered securities through repeated misstatements and omissions by then-CEO Zac Prince, COO Flori Marquez, and Gemini Trading. Bankruptcy filings also allege that Prince ignored risk-management advice and lent assets to Alameda Research, a move that may have contributed to BlockFi’s collapse.
BlockFi remains in Chapter 11 proceedings while it works to return customer assets. A bankruptcy court approved the company’s reorganization plan in September 2023, which aims to repay more than 10,000 creditors, and BlockFi previously agreed to an $875 million settlement with FTX and Alameda Research to resolve related claims.
The BlockFi estate has said it is working to complete final distributions, noting that substantial amounts of both fiat and crypto remain unclaimed by customers.
