A New Jersey judge has given preliminary approval for a $13-million settlement between a group of investors and cryptocurrency lending company BlockFi after months of delays.
In a Thursday filing in the US District Court for the District of New Jersey, Judge Claire Cecchi ordered BlockFi’s insurers to pay more than $13 million to an escrow account within 30 days as part of a class-action lawsuit filed in 2023. The order followed a February motion for preliminary approval, which was held up in part due to an objection from one investor.
The judge scheduled a Dec. 11 hearing to determine final approval of the settlement plan and discuss any objections from parties to the lawsuit. About 89,000 users who held interest accounts at the company from March 2019 until its bankruptcy in November 2022 were eligible for distributions under the settlement.
The lawsuit, filed following the bankruptcy of BlockFi in 2022, came amid a cryptocurrency market downturn likely precipitated by the collapse of the Terra ecosystem. Several high-profile companies filed for bankruptcy, including FTX, Celsius Network, and Voyager Digital.
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The initial complaint against BlockFi was filed by Trey Greene, representing a group of investors. They alleged the company sold unregistered securities “via a steady stream of misrepresentations and material omissions” from then-CEO Zac Prince, chief operating officer Flori Marquez, and Gemini Trading.
Bankruptcy court filings alleged Prince disregarded recommendations from BlockFi’s risk management team over lending assets to Alameda Research, potentially contributing to the company’s collapse.
Still in bankruptcy proceedings
In addition to the class-action lawsuit, BlockFi has taken steps to return users’ crypto holdings. A bankruptcy court approved the company’s Chapter 11 plan in September 2023 to repay over 10,000 creditors, and BlockFi reached an $875-million settlement with FTX and Alameda Research to resolve claims.
“The BlockFi Estate is working to make ALL final distributions,” said the company in an April 2 X post, adding: “There are still significant amounts of USD and crypto that have not been claimed by customers.”
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