The U.S. Securities and Exchange Commission (SEC), along with bankrupt cryptocurrency firm FTX and hedge fund 3 Arrows Capital (3AC), opposed BlockFi’s bankruptcy plans, according to a July 5 court filing. there is
SEC Opposes BlockFi’s Plans
among them filingthe SEC argued that the terms of BlockFi’s proposed plan were vague and broad because they did not provide adequate information to help other stakeholders.
As a result, the regulator has asked the court to suspend the company’s plans until BlockFi resolves the concerns raised.
“Debtors should provide more detailed information about such broader releases so that affected stakeholders can make informed decisions about their plans.”
Meanwhile, he further pointed out that financial regulators have a $30 million claim against the bankrupt cryptocurrency company. Last year, BlockFi agreed to pay SEC fined $50 million for failing to register loan products. At the time, the financier also agreed to pay an additional $50 million in fines to settle similar lawsuits in 32 states.
FTX Highlights “Multi-faceted” Relationships
for FTXThe Bankruptcy Exchange said its relationship with BlockFi is “multi-faceted,” but that the lender’s proposal is an “abuse of the planning process.”
In 2022, FTX extended a $250 million revolving credit line to BlockFi, but the issue has become a legal issue amid the companies’ bankruptcy proceedings. Beyond that, FTX further emphasized that Alameda has pledged hundreds of millions of dollars in collateral and payments to BlockFi.
FTX added that any attempt by BlockFi to redefine or subordinate these claims would be opposed, adding that “BlockFi debtors are now entitled to release their pre-filing acts and omissions in the liquidation plan.” I am blaming everyone except the pre-petition leaders who are asking,” he added. “
Objection to 3AC
The documents submitted include 3AC Since BlockFi has filed bankruptcy proceedings in U.S. courts, it argued that any attempt to subordinate its claims against BlockFi would violate the automatic suspension.
The hedge fund further said BlockFi’s proposed plan would not give the co-liquidators a “meaningful opportunity to challenge the subordination” of claims against bankrupt lenders.
3AC said it had more than $220 million in claims against BlockFi, making it one of the key creditors to bankrupt lenders.
FTX and 3AC echoed the SEC’s criticism, arguing that BlockFi failed to provide enough information for stakeholders to assess the feasibility of the plan.
The SEC, FTX and Three Arrows Capital contest for BlockFi’s bankruptcy plan was first listed on CryptoSlate.