Contrasting it to Celsius Network, a rival crypto lender in bankruptcy proceedings, BlockFi’s executives have not withdrawn any of their cryptocurrencies since October 2020. However, this was confirmed by the company’s lawyer to a U.S Bankruptcy Court for the District of New Jersey on Monday.
In November, BlockFi filed for bankruptcy after FTX’s downfall. During a hearing in the company’s Chapter 11 proceedings, Joshua Sussberg of Kirkland & Ellis noted that insiders had not taken money from the platform near this filing. In his words: “there was no situation where insiders were pulling money off the platform on the eve of or anywhere near this bankruptcy file.” According to him, this is unlike what happened with Celsius’ case – another client of theirs – as management extracted value before their own filing.
BlockFi plans to declare its assets and financial statement
On Wednesday, BlockFi will file its financials and a statement of assets and liabilities to the court; this has been confirmed by their recent post on Twitter. At the commencement of November’s hearing, they initiated a sale process and, according to Sussberg’s presentation, have contacted 106 prospective buyers from within the country and overseas who are eyeing parts or all of this enterprise. A January 30th hearing is in progress where BlockFi seeks permission to approve bidding proceedings.
According to Sussberg, five management team members withdrew a sum totaling approximately $15 million, with CEO Zac Prince removing an incredible amount of $6 million. This money was labeled as a “litigation settlement payment,” and tax payments were routed through executives.
Judge Michael B. Kaplin ultimately rejected BlockFi’s plea to seize Robinhood Markets’ (HOOD) shares that FTX had pledged as collateral for a loan, citing the government warrant of seizure in place and their absence from the pending adversary proceeding. “This court cannot issue any kind of turnover order presently,” expressed Judge Kaplin during the hearing before declaring his ultimate denial.
