A judge in New Jersey has provisionally approved a $13-million settlement involving investors and the cryptocurrency lending firm BlockFi after prolonged delays.
In a filing made on Thursday in the US District Court for the District of New Jersey, Judge Claire Cecchi mandated that BlockFi’s insurers deposit over $13 million into an escrow account within 30 days as part of a class-action lawsuit initiated in 2023. This order follows a preliminary approval motion from February, which faced delays partly due to an objection from one investor.
The judge has set a hearing for December 11 to finalize the settlement plan and consider any objections from the involved parties. Approximately 89,000 users who held interest accounts with the company from March 2019 until its bankruptcy in November 2022 are eligible for payouts under the settlement.
An order was filed Thursday for preliminary approval for a settlement involving BlockFi. Source: US District Court for the District of New Jersey
The lawsuit was filed after BlockFi’s bankruptcy in 2022, occurring during a downturn in the cryptocurrency market that likely followed the collapse of the Terra ecosystem. Numerous high-profile companies, including FTX, Celsius Network, and Voyager Digital, subsequently filed for bankruptcy.
Related: BlockFi bankruptcy administrator and DOJ agree to dismiss $35M lawsuit
The initial complaint against BlockFi was brought by Trey Greene on behalf of investors, who alleged that the company sold unregistered securities “through a continuous flow of misrepresentations and material omissions” from former CEO Zac Prince, COO Flori Marquez, and Gemini Trading.
Bankruptcy court documents indicated that Prince ignored advice from BlockFi’s risk management team regarding lending assets to Alameda Research, which may have contributed to the firm’s downfall.
Still in bankruptcy proceedings
Alongside the class-action lawsuit, BlockFi is also working to return users’ cryptocurrency holdings. A bankruptcy court approved the company’s Chapter 11 plan in September 2023 to reimburse over 10,000 creditors, and BlockFi reached an $875-million settlement with FTX and Alameda Research to address claims.
“The BlockFi Estate is striving to make ALL final distributions,” said the company in an April 2 X post, noting: “There are still significant amounts of USD and crypto that haven’t been claimed by customers.”
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