FTX News: Here’s How BlockFi Plans To Return All Customer Funds

In news related to FTX, Sam Bankman-Fried’s disbanded crypto empire seems to owe $680 million to now-bankrupt crypto lender BlockFi Inc., according to a lawyer who spoke to the federal judge presiding over BlockFi’s bankruptcy case.

On Tuesday, the crypto firm made its initial appearance in the bankruptcy court in Trenton, New Jersey, asking for routine consent to continue functioning while it attempts to devise a strategy to pay creditors by reorganizing or finding a potential buyer.

BlockFi’s Fight For Funds

As an effort of returning funds to its customers, the firm is reportedly going to try and collect funds that are owed by other cryptocurrency companies; the most notable being Sam Bankman-Fried’s bankrupt trading firm, Alameda Research. A lawyer for the lender testified at the hearing that Alameda had defaulted on a number of collateralized loans from BlockFi.

As part of our restructuring efforts, we will focus on recovering all obligations owed to BlockFi by counterparties, including FTX.

— BlockFi (@BlockFi) November 28, 2022

Additionally, BlockFi owes FTX roughly $275 million. This debt was included in a lending arrangement that was intended to support BlockFi’s declining financials during the crypto market meltdown that caused several businesses to file for bankruptcy.

According to company attorney Joshua Sussberg, the corporation will shortly request permission from U.S. Bankruptcy Judge Michael Kaplan, who is presiding over the case, to restore money kept in customers’ individual digital wallets.

BlockFi’s Bankruptcy On FTX News

BlockFi declared bankruptcy on Monday, attributing its demise to Bankman-Fried’s enterprise which had earlier this month applied for Wilmington, Delaware court protection. BlockFi sued Emergent Fidelity Technologies as part of its bankruptcy proceedings in an effort to recoup assets it claims were used as collateral for unpaid debt.

Read More: BlockFi Files For Bankruptcy Amid FTX Contagion Effect

BlockFi, which has licenses in 32 states, is collaborating with US regulators to revive projects that had been put on hold following a US Securities and Exchange Commission inquiry.

The judge granted BlockFi permission to continue covering payroll and other essential costs even while filing for bankruptcy. The court also permitted BlockFi to withhold the identities of several of its largest debtors, whom BlockFi claims are clients who should remain anonymous.

Read More: Ripple Counsel Calls Out SEC Over BlockFi Bankruptcy

At a later hearing, Kaplan may give the U.S. Trustee, a division of the Justice Department that oversees corporate bankruptcy proceedings, the chance to defend the confidentiality of the names.