Proposals put forward by defunct crypto lender BlockFi are an abuse of bankruptcy rules, according to a legal filing made by FTX, with over a billion dollars of disputed transactions at stake, CoinDesk reported. BlockFi’s plans, set to be discussed at a July 13 New Jersey court hearing, were also opposed by liquidated hedge fund Three Arrows Capital and the Securities and Exchange Commission (SEC). 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. The filings are an attempt to unravel complex financial transactions among crypto companies, which are now undergoing separate bankruptcy cases as they attempt to repay customers and other creditors. BlockFi may also have claims against FTX in parallel proceedings being held in Delaware, to which FTX’s lawyers “expect to object,” the filing said. Three Arrows Capital, which says it’s owed more than $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.
