A United States judge has approved a settlement that resolves claims and disputes between crypto lender BlockFi and defunct crypto hedge fund Three Arrows Capital (3AC). The judge has also ordered that the details of the settlement remain sealed.
During a hearing on February 6, New Jersey Bankruptcy Court Judge Michael Kaplan approved the settlement between the companies to avoid further legal battles. BlockFi claimed that 3AC owed it $129 million, while the hedge fund claimed that BlockFi owed it $280 million.
Judge Kaplan decided not to unseal the settlement agreement, arguing that doing so would be “counter-intuitive.” He also rejected the U.S. Trustee’s objection to the seal, which argued that the terms should be disclosed because the debtors had not justified the need to seal the settlement.
However, BlockFi’s motion to seal certain information argued that the terms are commercially sensitive and could impact litigation against bankrupt crypto exchange FTX.
The court approved the motion to seal, stating the need to safeguard settlement strategies and show respect for comity with 3AC’s foreign bankruptcy proceeding. The approval of the settlement enables BlockFi to proceed with distributions from the lending estate to creditors, which was a significant reason for seeking swift approval.
In September 2023, Judge Kaplan sanctioned BlockFi’s amended Chapter 11 and customer repayment plan when the company was given the go-ahead for liquidation.
At that time, estimates indicated that BlockFi owed up to $10 billion to over 100,000 creditors, including $1 billion to its three largest creditors and $220 million to 3AC.
Three Arrows Capital collapsed in June 2022, while BlockFi filed for bankruptcy in late November 2022 following the fall of FTX. Earlier this month, crypto bankruptcy claims platform OPNX, launched by 3AC co-founders Su Zhu and Kyle Davies, announced that it will officially cease all operations and shut down by Feb. 14.
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