A settlement resolving disputes between crypto lender BlockFi and defunct crypto hedge fund Three Arrows Capital (3AC) has received approval from a United States judge, although the details of the agreement will remain sealed.
In a hearing on February 6, New Jersey Bankruptcy Court Judge Michael Kaplan approved the settlement, which aims to halt further legal battles between the two entities. The settlement comes in the wake of BlockFi claiming that 3AC owed it $129 million, while 3AC countered with a claim that BlockFi owed it $280 million.
Despite the approval, Judge Kaplan decided to keep the terms of the settlement confidential, arguing that it would be "counter-intuitive" to disclose them. The decision to seal the agreement was made to protect commercially sensitive information and maintain comity with 3AC's foreign bankruptcy proceeding.
BlockFi had motioned to seal certain details of the settlement, citing their sensitivity and potential impact on litigation involving bankrupt crypto exchange FTX. The court granted this motion, allowing BlockFi to proceed with distributions from the lending estate to creditors, a crucial step in its path toward resolution.
BlockFi's amended Chapter 11 and customer repayment plan was previously approved by Judge Kaplan in September 2023, facilitating the firm's clearance for liquidation. Estimates suggest that BlockFi owes up to $10 billion to over 100,000 creditors, including significant amounts to its three largest creditors and $220 million to 3AC.
The collapse of Three Arrows Capital in June 2022 and BlockFi's subsequent bankruptcy filing in November 2022, following the downfall of FTX, underscore the complexity of the crypto industry and the challenges faced by key players.
Additionally, the recent announcement of the shutdown of crypto bankruptcy claims platform OPNX, founded by 3AC co-founders Su Zhu and Kyle Davies, adds another layer to the evolving landscape of crypto-related legal proceedings.