U.S. Court Grants Preliminary Approval for $13M BlockFi Investor Settlement

A preliminary approval granted by a U.S. District Court judge in New Jersey has moved the $13 million BlockFi settlement closer to finalization, marking a significant step in resolving a class-action lawsuit brought by investors affected by the 2022 collapse of the crypto lending platform [1]. The settlement, funded by BlockFi’s insurers, is intended to compensate approximately 89,000 former interest account holders who were active between March 2019 and November 2022 [1]. Insurers have been ordered to deposit the funds into an escrow account within 30 days, with a final approval hearing scheduled for December 11 [1].

The class-action lawsuit was initiated by investor Trey Greene on behalf of claimants, who alleged that BlockFi sold unregistered securities and made material misrepresentations through executives and its ties to Gemini Trading [1]. Additionally, the company’s risky lending practices—particularly those involving Alameda Research—were cited as contributing factors to its collapse [1]. The withdrawal of a single investor’s objection in February cleared the path for the court’s preliminary approval, allowing the process to advance [1].

Following court confirmation, eligible investors will be entitled to pro rata distributions, with the process administered under BlockFi’s Chapter 11 bankruptcy proceedings [1]. The claims administration is ongoing, with efforts focused on reconciling claims and locating unclaimed assets, both in USD and cryptocurrency [1]. The court must first finalize the settlement terms and confirm distribution timelines before payouts can be made [1].

The $13 million settlement is distinct from a separate $875 million resolution involving FTX and Alameda Research, which remains part of the broader bankruptcy process [1]. Investors are advised to monitor court filings and notices from the bankruptcy administration for updates on claim procedures and eligibility [1].

The next key developments to watch include the December 11 final-approval hearing and the subsequent distribution of funds to claimants [1]. With the insurers now required to fulfill the escrow deposit within the next 30 days, the settlement is on track to move forward. The process highlights the evolving landscape of accountability in the crypto sector, particularly in the wake of high-profile collapses such as Terra in 2025 [1].

Source:

[1] Preliminary Approval Could Pave Way for $13M BlockFi Settlement Amid Fallout From Terra Collapse (https://en.coinotag.com/preliminary-approval-could-pave-way-for-13m-blockfi-settlement-amid-fallout-from-terra-collapse/)