Creditors of the now-defunct crypto lender BlockFi have filed to liquidate the company, accusing management, including CEO Zac Prince, of fraud, extortion, and mischief in delaying resolution of bankruptcy proceedings. The creditors allege that BlockFi is holding up the case in order to negotiate legal releases for its senior management, who are culpable for loans made to FTX’s Alameda Research. It is time to end all of this, the creditors’ filing said.
The creditors also refer to an investigative report into activities at the company, which they say reveals, in great detail, that BlockFi (Mr. Prince in particular) perpetrated a fraud on customers. The filing argued that BlockFi was taking unfair advantage of its legal monopoly on proposing a way out of bankruptcy, and that the mediation is over; negotiations are over.
In parallel with the creditors’ filing, BlockFi filed an updated plan under Chapter 11 of the bankruptcy code. An amended disclosure statement suggests that holders of BlockFi interest accounts, collectively owed around $1 billion, can expect to recover between 39% and 100% of their assets under the bankruptcy plan.