Customers of failed crypto lender BlockFi may soon be able to recoup a portion of their frozen crypto assets after a bankruptcy court judge reportedly greenlit the firm’s liquidation plan.
BlockFi stopped allowing its customers to make withdrawals in November 2022, citing a lack of clarity from FTX, one of the lending platform’s biggest borrowers.
According to a new report from Bloomberg, Judge Michael Kaplan said during a hearing on Tuesday that he will approve the liquidation plan that would see unsecured BlockFi creditors getting around 35% to 63% of the funds they are owed and some creditors receiving partial repayments in Bitcoin (BTC) and Ethereum (ETH).
The outcome of BlockFi’s legal battles against FTX, crypto hedge fund Three Arrows Capital and other bankrupt digital asset firms, though, could potentially increase creditors’ recoveries by up to $1 billion.
Kaplan approved the liquidation plan after BlockFi’s senior management and the creditors’ committee settled their dispute stemming from accusations that the management ignored the red flags of FTX.
In a court filing, the committee says the settlement will avoid the administrative expenses that could reduce the amount that BlockFi customers would get.
The report says the committee hopes the repayments will begin sometime this year.
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