The administrator overseeing BlockFis bankruptcy wind-down and the US Department of Justice (DOJ) have reached a settlement to dismiss a $35 million crypto asset transfer lawsuit involving the crypto lender.The agreement was approved by Judge Michael B.
Kaplan of the US Bankruptcy Court for the District of New Jersey on Friday, according to court filings.The lawsuit, filed in May 2023, sought to transfer over $35 million in crypto assets from BlockFi to the US government.
The DOJ said it had warrants to seize the funds from the BlockFi accounts of two Estonian citizens in a criminal fraud case unrelated to BlockFis bankruptcy.At the time, the DOJ argued that the US Bankruptcy Court for the District of New Jersey did not have the jurisdiction to prevent BlockFi from transferring the assets.
The dispute arose during BlockFi's bankruptcy proceedings.A snippet of the lawsuit.
Source: Bloomberg LawRelated: California revokes BlockFis lending license 2 years after bankruptcyCase dismissed with prejudiceUnder the stipulation agreed upon by both parties, the case was dismissed with prejudice, meaning it cannot be refiled.
Each party will bear its own legal fees and costs as part of the settlement.Mohsin Meghji, Plan Administrator for BlockFis wind-down estates, represented the crypto firm in the case.
The Department of Justice was represented by senior trial counsel Seth B.
Shapiro and his team from the Civil Divisions Commercial Litigation Branch.In May last year, BlockFi announced plans to shut down its web platform while partnering with Coinbase to help clients withdraw their remaining funds.
Eligible users, including those with BlockFi Interest Accounts, retail loans, and private client accounts, can use Coinbase for withdrawals.The company declared bankruptcy in November 2022 following the collapse of FTX and subsequently set a withdrawal deadline of April 28, 2024, for customers to reclaim their crypto holdings.Related: BlockFi and 3AC settlement deal gets judges go-ahead but remains sealedBlockFi reaches settlement with FTXIn March last year, BlockFi also reached an $875 million settlement with FTX and Alameda Research estates, resolving about $1 billion in claims.
CEO Zac Prince testified that FTX founder Sam Bankman-Frieds actions directly caused BlockFis bankruptcy.The bankruptcy court approved BlockFis Chapter 11 plan in September 2023 to repay over 10,000 creditors.
BlockFi owes approximately $10 billion to more than 100,000 creditors, including major debts to its top three creditors and the bankrupt hedge fund Three Arrows Capital.Magazine: Inside a 30,000 phone bot farm stealing crypto airdrops from real users