Customers of the bankrupt crypto lender BlockFi are one step closer to recovering at least some of their assets.
In a tweet on Saturday, the firm announced that it has filed a disclosure statement with the New Jersey court overseeing its insolvency proceedings.
BlockFi: Another FTX Casualty
BlockFi first filed for Chapter 11 bankruptcy protection back in November. In its initial filing, the company blamed a liquidity crisis created by its exposure to FTX.
Through loans to Alameda Research, BlockFi became one of the most high-profile victims of the FTX-Alameda scandal. It also held cryptocurrencies on FTX’s platform that it has been unable to recover.
In a series of tweets on Saturday, BlockFi explained that what it can recover for clients is largely dependent on its efforts to claw back money from FTX and Alameda.
The Bankrupt company will now present its disclosure statement to the Court on June 20.
After that date, the solicitation process will commence. That means the disclosure statement will be sent to BlockFi’s various creditors. They will then be able to vote on whether or not to accept the plan.
A Chain of Debt
Of course, BlockFi isn’t the only company that took a serious hit from the collapse of FTX.
Many crypto businesses held assets on the platform. And various crypto funds and individual investors were also caught up in the storm.
To complicate matters further, FTX is in its own battle to claim nearly $4 billion from the embattled crypto platform Genesis.
In that case, FTX lawyers want loan repayments the firm made to Genesis 90 days before it went bust. Overall, Genesis lent billions of dollars to Alameda Research but much of this was repaid by the time the FTX companies collapsed.
As the case unfolds, to counter FTX’s claim, Genesis must disprove allegations that the repayments diverged from normal debt collection practices.
IRS Jumps Line Ahead of FTX Creditors
Another factor may further frustrate FTX creditors’ attempts to recuperate their lost funds. A recent filing made by the Internal Revenue Service (IRS) reveals that the tax authority is claiming priority over creditors in the FTX bankruptcy case.
The agency is claiming $44 billion in tax claims from the defunct exchange.
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