The administrator of BlockFi, a cryptocurrency financial services company, has settled a $35 million crypto asset transfer lawsuit with the US Department of Justice (DOJ). According to Bloomberg, the agreement was approved on Friday by New Jersey Bankruptcy Court Judge Michael B. Kaplan, clarifying judicial boundaries in crypto asset seizures.
The case initially filed in May 2023, claiming the DOJ’s attempt to seize funds in BlockFi accounts linked to two Estonian nationals, has now been resolved. The District Court of New Jersey judge, Mr. Kaplan, dismissed the lawsuit with prejudice, meaning it cannot be reopened and no future claims can be made on the disputed assets.
This approved dismissal by the court allows BlockFi Bankruptcy Estate to proceed without further legal hindrances related to its crypto assets. Both parties have agreed to bear their own legal costs, reflecting a pragmatic solution to the dispute.
After settling the lawsuit with the DOJ, BlockFi can thoroughly process the repayment to creditors and customers following its bankruptcy proceedings. By April 2025, 90% of the US customers claimed their distributions, while it was only 43% of international customers had been repaid.
A deadline was set for May 15, 2025, to claim the remaining funds, indicating a portion of the creditors’ claims is still overdue. While aiming for 100% repayment, BlockFi has also stated that it is actively working to ensure eligible clients receive their distributions.
Settling the lawsuit of the US Department of Justice has added another feather to BlockFi’s hat of resolving issues with enterprises. In March 2023, BlockFi reached an $875 million settlement with the FTX and Alameda Research estates. These actions are the key steps in the company’s bankruptcy process and towards fulfilling its obligations to creditors.
Unlike most bankrupt enterprises, BlockFi has prioritized outlining a structured repayment strategy for its creditors. The company planned to maximize recoveries despite the legal hurdles and has been working diligently to fulfill those obligations.
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