HomeNewsBlockFi Clashes with FTX and 3AC Over Multi-Billion-Dollar Fraud Allegations

BlockFi Clashes with FTX and 3AC Over Multi-Billion-Dollar Fraud Allegations

- Advertisement -
  • BlockFi challenges FTX and 3AC’s claims, citing fraudulent schemes in their bid for billions.
  • Amidst its liquidation, BlockFi’s future repayments to creditors hinge heavily on the outcome against FTX and 3AC.

BlockFi’s Counter Against FTX and 3AC’s Alleged Schemes

Amidst the turbulence in the crypto sector, BlockFi has found itself in a contentious standoff with both FTX and Three Arrows Capital (3AC). The crux of this legal quagmire revolves around billions of dollars that were transacted prior to the collapse of these financial behemoths.

According to recent court documents, BlockFi alleges falling prey to deceitful practices orchestrated by FTX, particularly under the helm of its former CEO, Sam Bankman-Fried. This alleged duplicity entailed FTX, in conjunction with Alameda Research, artfully diverting customer funds, leading to the embezzlement of investors.

The Layered Allegations

Diving deeper into the accusations, BlockFi points to a meticulously crafted ploy by FTX which swayed the lender into advancing over $1 billion of digital assets, assets that were housed on the BlockFi platform, to Alameda Research.

With BlockFi undergoing liquidation since May, it now contests FTX’s claim to the hefty sum of $5 billion. But FTX isn’t the sole entity in BlockFi’s crosshairs. The lender is equally skeptical of 3AC, a once prominent hedge fund based in Singapore that crumbled last year. Citing purported dishonest conduct, BlockFi challenges 3AC’s demands for repayment. The backdrop to this is 3AC’s own tumultuous journey, having declared bankruptcy after a series of high-stakes crypto gambles, compounded by alleged mismanagement.

This intricate legal web holds vast implications. At stake are the potential repayments to the creditors of not only BlockFi but also FTX and 3AC as their bankruptcy proceedings unfold.

Given the magnitude of the ongoing disputes, BlockFi has expressed concerns. It believes these confrontations could potentially shave off up to $1 billion from repayments destined for its clientele. Further compounding matters, BlockFi’s recovery efforts for its clients are intertwined with the judicial determinations against FTX and 3AC.

On the other side, FTX, with its founder Bankman-Fried professing his innocence against the fraud allegations, is on a quest to recoup loan settlements and collateral that were once pledged to BlockFi. This sum incorporates approximately $90 million that BlockFi had previously withdrawn from FTX.com.

In a silver lining of sorts, August witnessed a settlement between BlockFi and its creditors, paving the way for a debt repayment plan. As per this recent proposal, funds not secured in wallets would be reverted to the customers, with the stipulation that any amounts under $250,000 that had migrated from BlockFi accounts to client wallets would remain untouched.

However, the year also saw BlockFi’s unsecured creditors pushing for an independent Chapter 11 trustee, a move that arose from claims that BlockFi had, in a breach of trust, liquidated nearly $240 million of customer crypto assets.

Disclaimer: ETHNews does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products, or other materials on this page. Readers should do their own research before taking any actions related to cryptocurrencies. ETHNews is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods, or services mentioned.
Godfrey Benjamin
Godfrey Benjamin
Godfrey Benjamin is an experienced crypto journalist whose primary goal is to educate everyone about the prospects of Web 3.0. His love for crypto was sparked during his time as a former banker when he recognized the clear advantages of decentralized money over traditional payments. Business Email: info@ethnews.com Phone: +49 160 92211628