Preliminary Approval Could Pave Way for $13M BlockFi Settlement Amid Fallout From Terra Collapse

• Judge ordered insurers to fund a $13M escrow within 30 days

• About 89,000 former BlockFi interest-account users are eligible for payouts.

• Final approval hearing scheduled for Dec. 11; distributions follow court confirmation.

BlockFi settlement: NJ judge preliminarily approves $13M escrow for investors — learn deadlines and claim steps. Read guidance on eligibility and timelines.

What is the BlockFi $13-million settlement?

The BlockFi settlement is a preliminary court-approved agreement requiring BlockFi’s insurers to deposit just over $13 million into an escrow account to resolve a 2023 class-action claim by investors who held interest accounts from March 2019 to November 2022. The deposition must occur within 30 days; final approval is pending a Dec. 11 hearing.

How does the settlement affect eligible BlockFi investors?

Eligible investors — roughly 89,000 account holders identified in court filings — may receive pro rata distributions after the court grants final approval. The order asks insurers to fund escrow first, then the court will resolve any objections and oversee distribution mechanics. Bankruptcy administration and related settlements (including an $875-million resolution with FTX and Alameda Research) remain separate but relevant to overall recoveries.

After a BlockFi investor withdrew an objection filed in February, a judge appeared to clear the way for the next step in a settlement of a class-action lawsuit.

Why was the settlement delayed and what changed?

The preliminary approval motion, filed earlier this year, was delayed by a single investor objection. That objection has since been withdrawn, allowing Judge Claire Cecchi to order insurers to fund the escrow. The court’s Dec. 11 hearing will address any remaining objections and the plan for distributing funds to claimants.

Who filed the class-action and what are the allegations?

The complaint was filed by Trey Greene on behalf of investors. It alleges BlockFi sold unregistered securities and made material omissions and misrepresentations through executives including then-CEO Zac Prince and COO Flori Marquez, and through its relationship with Gemini Trading. Bankruptcy court records allege risky lending to Alameda Research, which may have contributed to BlockFi’s collapse in 2022.

How will distributions be processed?

Distributions will follow a court-approved claims process administered under BlockFi’s Chapter 11 proceedings. The bankruptcy estate has been working to reconcile claims and locate unclaimed USD and crypto assets. The court must first accept final settlement terms and confirm distribution timelines.

What is the timeline to watch?

• 30 days: Insurers ordered to deposit $13M+ into escrow.
• Dec. 11: Final-approval hearing before the US District Court for the District of New Jersey.
• Post-approval: Claims administration and pro rata payouts overseen by the bankruptcy trustee and court.

Frequently Asked Questions

Who is eligible for the BlockFi settlement?

Account holders who maintained BlockFi interest accounts from March 2019 until the company’s Chapter 11 filing in November 2022 are eligible. Court filings estimate roughly 89,000 potential claimants.

When will I get paid if I’m eligible?

Payouts depend on final court approval and the claims administration timeline. Insurers must fund escrow within 30 days; distributions follow after the Dec. 11 hearing and any final claims reconciliation.

Does this settlement affect BlockFi’s Chapter 11 plan?

The class-action settlement addresses specific investor claims. BlockFi’s Chapter 11 plan and its $875-million settlement related to FTX and Alameda Research remain part of the broader bankruptcy process and separate distributions may continue under that plan.

Key Takeaways

• Preliminary approval: A New Jersey judge ordered insurers to deposit $13M+ into escrow within 30 days.
• Scope: About 89,000 former interest-account holders are eligible for distributions.
• Next steps: Final-approval hearing set for Dec. 11; distributions follow court confirmation.

Conclusion

The BlockFi settlement advances toward final approval after an investor withdrew an earlier objection, with insurers ordered to fund a $13-million escrow. Eligible account holders should monitor court filings and bankruptcy-administration notices for claim instructions and timelines. COINOTAG will track updates and provide guidance as the Dec. 11 hearing approaches.