Customers of the defunct cryptocurrency lender BlockFi are a step closer to reclaiming at least a portion of their assets. The firm announced in a recent Twitter post that it had submitted a statement of disclosure to the court that is handling its insolvency hearings.
BlockFi initially sought protection under Chapter 11 bankruptcy last November. The firm alleged liquidity troubles caused by its exposure to FTX in its original filing. BlockFi would become one of the most recognizable casualties of the FTX/Alameda controversy after arranging loans for Alameda Research. The lender additionally held cryptocurrency on the FTX platform that it has been unable to reclaim.
BlockFi explained in a string of Twitter posts that the amount of money that it can collect for clients is primarily reliant on how much money it is able to recoup from FTX and Alameda. On June 20th, the bankrupt firm is going to submit its disclosure declaration to the Court.
The solicitation phase will begin after that date. At that point, BlockFi’s creditors will receive the disclosure declaration. Creditors will then have the opportunity to vote on whether to accept or reject the proposal.
BlockFi isn’t the only firm that has suffered as a result of FTX’s demise though. Many cryptocurrency companies had assets on the FTX platform. Various cryptocurrency funds and private investors also got caught in the crossfire.
To make matters even more complicated, FTX is fighting for nearly $4 billion from the beleaguered cryptocurrency network Genesis. In that lawsuit, FTX attorneys want the firm’s debt repayments that were submitted to Genesis made 90 days before it declared bankruptcy.
Genesis loaned billions to Alameda Research, but the majority of these funds were settled by the point when the FTX enterprises failed. In order to challenge FTX’s claim, Genesis has to disprove the charges that the repayments deviated from standard debt-collecting processes.
The attempts on the part of FTX’s creditors to get back some of the money they lost can be further complicated by yet another reason. The US Internal Revenue Service recently submitted a filing to the court that states that it has claimed priority status in the FTX bankruptcy proceedings, placing it above the firm’s other creditors. The tax agency is asserting that the now-defunct exchange owes it a total of $44 billion in back taxes.