BlockFi, the bankrupt cryptocurrency lending firm, is facing a new court filing by disgruntled creditors in response to the company’s recent restructuring plan. On May 12, BlockFi outlined its Chapter 11 reorganization plan, noting that selling the company may not generate enough value for creditors, who are owed nearly $1.3 billion. In response, BlockFi creditors wrote a court filing on May 15, claiming that BlockFi deliberately delayed the trial by selling about $240 million worth of crypto before filing for bankruptcy in late November 2022.
Represented by law firm Brown Rudnick, BlockFi creditors criticized the cryptocurrency lender for selling its digital assets “at the nadir,” referring to a significant market slump following the collapse of FTX, a move they claimed was a “very poor decision” and cost more than $100 million. In addition, BlockFi customers alleged that the company spent $22.5 million of customer funds to buy a $30 million insurance policy after selling out the digital assets before filing for bankruptcy. The creditors called on the court to end the case as soon as possible by passing estate assets “into the hands of new management.”
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