Crypto Prices

Settling in Sight: $13.2 Million Settlement Nears Approval as Last Objector Backs Down for BlockFi Investors

5 hours ago
1 min read
3 views

BlockFi Class Action Settlement Progresses

A class action settlement worth $13.2 million for investors of BlockFi is progressing towards final approval following the withdrawal of the last objector to the agreement. This development may pave the way for thousands of impacted individuals to receive compensation after their funds were inaccessible during the company’s collapse in 2022.

Withdrawal of Objections

On Wednesday, attorneys representing the lead plaintiffs communicated with U.S. District Judge Claire Cecchi, indicating that Yacov Baron, the remaining challenger, has decided to drop both his intervention motion and his objections to the settlement proposal. In their correspondence, the attorneys emphasized that a swift resolution of the Preliminary Approval Motion would enable the plaintiffs to start notifying class members and would mitigate the chance of complications during BlockFi, Inc.’s ongoing bankruptcy process.

Settlement Details

The suggested settlement encompasses all U.S. residents who held BlockFi interest accounts from March 2019 to November 2022. With Baron’s opposition no longer in play, approximately 89,000 holders of BlockFi accounts, whose funds were frozen following the company’s failure, may soon be eligible for compensation.

Expert Commentary

Legal expert Navodaya Singh Rajpurohit, from Coinque Consulting, commented on the situation, stating, “Individuals who have opted out from class actions have the option to pursue personalized claims, targeting specific damages and avoiding constraints imposed by the class settlement.”

He also noted the distinct treatment of criminal charges against company officers in bankruptcy cases, drawing a parallel to Celsius founder Alex Mashinsky’s 12-year prison sentence for fraud, despite his company’s bankruptcy status.

Background on BlockFi’s Collapse

BlockFi’s downfall was part of a broader crisis in the cryptocurrency sector that followed the failure of Do Kwon’s TerraUSD stablecoin in May 2022, an event that erased billions and triggered significant lender instability. By November of that year, the troubles had reached Sam Bankman-Fried’s FTX, leading to BlockFi inadvertently exposing itself to a staggering $680 million loss linked to the FTX and Alameda Research debacle. BlockFi subsequently filed for bankruptcy a day after FTX, citing grave liquidity issues.

CEO’s Awareness and Legal Consequences

Further insights revealed that CEO Zac Prince was aware of FTX’s precarious financial situation as early as August 2021 yet continued business dealings with them. Meanwhile, Kwon, who entered a guilty plea for conspiracy and wire fraud in August, faces a potential 12-year prison sentence alongside a $19 million restitution agreement.

Investor Options and Legal Advice

While over 10,000 investors have chosen to opt out of protection under the bankruptcy framework, the settlement is set to allocate funds equally among all class members—an aspect Baron previously condemned as “grossly unfair” before retracting his objections without providing reasons. Andy Lau, an attorney at the David Cameron Law Office, advised victims of investment fraud or those affected by cryptocurrency platforms to seek legal recourse for recovering their losses, highlighting how advancements in blockchain tracing technologies may significantly boost recovery prospects for misappropriated BlockFi assets.