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Court approves sealed settlement deal between BlockFi and 3AC



A U.S. bankruptcy court has approved a confidential settlement between BlockFi and Three Arrows Capital (3AC), effectively resolving the ongoing counterclaims between the two entities. The court’s approval is a step toward bringing closure to the legal dispute between the two firms.

However, the court has decided against disclosing the details of the settlement, citing the sensitive nature of the information involved. This decision reflects the court’s consideration for maintaining confidentiality and privacy regarding the terms and conditions agreed upon by both parties.

BlockFi was a privately held, NYC-based lending platform founded in 2017. Its flagship product was the BlockFi Interest Account (BIA), which allowed users to earn compound interest on cryptocurrencies such as BTC, ETH, LTC, USDC, USDT, GUSD, and PAXG.

However, in 2022, BlockFi filed for Chapter 11 bankruptcy, citing a complicated financial relationship and regulatory issues. The company’s collapse has raised concerns about investor protections in the crypto space, as crypto holdings fall into a gray area of law and regulation, and investors must now hope to recover their funds through the bankruptcy process.

Three Arrows Capital (3AC) was a Singapore-based cryptocurrency hedge fund founded in 2012 by Kyle Davies and Su Zhu. The company borrowed billions of dollars to fund its trading, and according to July 2022 bankruptcy filings, it faces $3.5 billion in creditors’ claims.

3AC was one of the largest crypto hedge funds in the world before it failed to meet margin calls from its lenders, leading to its liquidation and bankruptcy in June 2022.

In December 2023, a court in the British Virgin Islands banned 3AC co-founders Su Zhu and Kyle Davies from transferring or selling assets worth up to $1.14 billion and ordered the freezing of their domestic assets in Singapore.

This approval enables BlockFi to distribute assets to creditors, a crucial post-bankruptcy step in the intricate crypto industry landscape. The decision underscores the urgency for creditor repayments, with BlockFi’s Chapter 11 plan initially sanctioned in September 2023.

Read also; Starknet announces v0.13.1 with EIP-4844 support to reduce gas fees

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