BlockFi Reaches Settlement in Crypto Asset Transfer Case
BlockFi, the bankrupt cryptocurrency lender, has reached a settlement with the U.S. Department of Justice (DOJ) to dismiss a $35 million lawsuit involving a crypto asset transfer dispute. The agreement brings an end to a legal conflict that had been ongoing since May 2023.
The case stemmed from DOJ efforts to seize funds linked to foreign nationals involved in fraud—separate from BlockFi’s bankruptcy. The DOJ claimed it had warrants to seize the crypto assets from accounts held by two Estonian citizens, citing criminal activity unrelated to BlockFi itself.
Lawsuit Dismissed with Prejudice
The settlement was approved by U.S. Bankruptcy Judge Michael B. Kaplan in the District of New Jersey. According to the court order, the lawsuit has been dismissed with prejudice, meaning it cannot be refiled in the future.
Each party agreed to cover its own legal expenses, signaling a clean legal break between BlockFi and the DOJ. The stipulation allows BlockFi’s bankruptcy administrator, Mohsin Meghji, to continue focusing on the estate’s wind-down without additional government interference.
Background: BlockFi’s Collapse and Ongoing Wind-Down
BlockFi filed for Chapter 11 bankruptcy in November 2022, following the high-profile collapse of crypto exchange FTX. The lender cited liquidity issues and significant exposure to FTX and Alameda Research.
Since then, BlockFi has been working through a court-approved plan to repay more than $10 billion in liabilities owed to over 100,000 creditors. In March 2024, the firm reached a separate $875 million settlement with FTX and Alameda, resolving approximately $1 billion in claims.
Platform Shutdown and Client Withdrawals
In May 2024, BlockFi shut down its web platform and began partnering with Coinbase to assist customers with crypto withdrawals. Eligible users with BlockFi Interest Accounts and retail loans were given until April 28, 2024, to reclaim their assets.
BlockFi’s final focus remains on returning as much value as possible to affected clients and stakeholders.
Final Thoughts
The DOJ lawsuit resolution marks another step forward in BlockFi’s complex legal and financial restructuring. By dismissing the $35 million case, BlockFi removes a significant legal hurdle and can now prioritize the completion of its creditor repayment plan.
As the crypto industry continues to recover from major bankruptcies, legal clarity and settlements like this are crucial for restoring investor confidence.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.