FTX, Three Arrows Capital (3AC), and the Securities and Exchange Commission (SEC) have all criticized BlockFi’s proposed bankruptcy plans, with FTX claiming in a Wednesday legal filing that the plans are an abuse of the plan process. FTX, which bailed out the troubled lender last year before itself filing for bankruptcy in November, says its sizable claims against BlockFi have been unfairly downgraded by the proposed plan. FTX cites hundreds of millions of dollars of repayments and collateral linked to a loan with FTX’s trading arm Alameda Research, and $1 billion in collateral pledges made by Emergent Fidelity, a company set up by FTX chief Sam Bankman-Fried to hold shares in Robinhood (HOOD).
Three Arrows Capital, which says it’s owed over $220 million by BlockFi, also protested that it wasn’t being given a chance to contest fraud allegations, while the SEC said proposed clauses to release BlockFi and its management were overly vague and broad. After the SEC voiced similar objections in relation to crypto lender Voyager, legal delays meant Binance.US pulled out of its offer to buy the company. BlockFi’s creditors have also argued that its bankruptcy plan is a costly and elaborate way to free executives from legal responsibility for poor financial decisions, and have said the company should simply be liquidated.