Settlement Gains Preliminary Approval
A New Jersey federal judge has granted preliminary approval for a $13 million settlement in a class-action lawsuit against cryptocurrency lender BlockFi. The approval followed the withdrawal of an investor objection that had delayed proceedings since February.
Judge Claire Cecchi ordered BlockFi’s insurers to deposit the settlement funds into an escrow account within 30 days. A final approval hearing is scheduled for December 11, where any further objections will be considered.
Who Is Eligible for Payouts
Roughly 89,000 BlockFi users who held interest accounts between March 2019 and November 2022, when the company filed for bankruptcy, are eligible for compensation under the agreement.
The case stems from BlockFi’s 2022 collapse, which occurred during a wider market downturn that also brought down FTX, Celsius Network, and Voyager Digital.
Allegations Against BlockFi
The lawsuit was initially filed by investor Trey Greene, who alleged that BlockFi sold unregistered securities through misleading statements by then-CEO Zac Prince, COO Flori Marquez, and Gemini Trading.
Court documents also claim Prince ignored warnings from BlockFi’s risk management team about lending to Alameda Research, a move that may have contributed to the firm’s downfall.
Bankruptcy Proceedings Continue
Beyond the settlement, BlockFi continues to work through bankruptcy. In September 2023, a court approved its Chapter 11 plan to repay over 10,000 creditors. The company also reached an $875 million settlement with FTX and Alameda Research to resolve related claims.
“The BlockFi Estate is working to make ALL final distributions,” the firm stated on X in April, adding that many eligible customers have yet to claim their funds.
