BlockFi argues FTX, Three Arrows Capital isn’t entitled to repayments
Bankrupt cryptocurrency lender BlockFi is trying to block attempts by the similarly bankrupt FTX and Three Arrows Capital (3AC) that aim to retrieve hundreds of millions of dollars to pay back their creditors.
BlockFi claimed in an Aug. 21 filing to a New Jersey bankruptcy court that its own creditors shouldn’t be pushed to the back of the line because FTX’s creditors were harmed by the exchange allegedly misappropriating $5 billion BlockFi lent it.
“FTX seeks to recover on over $5 billion of claims filed against the BlockFi estates at the direct expense of the ultimate victims of FTX’s fraud: BlockFi’s clients and other legitimate creditors.”
“To prevent further injustice to the creditors of BlockFi’s estates, the Court should disallow the FTX Claims under the doctrine of unclean hands,” BlockFi added.
FTX also provided $400 million to BlockFi in June 2022 in addition to buying BlockFi equity pursuant to a loan agreement, the filing stated.
However, BlockFi claimed it wasn’t a standard loan agreement — it was an unsecured, 5-year term that was well below market interest rates and repayments weren’t due until the firm would supposedly mature.
BlockFi referred to FTX’s investment as a “gamble” that BlockFi creditors shouldn’t be liable for.
“Just because FTX’s fraudulent actions caused FTX’s bet to fail does not mean BlockFi’s creditors are now somehow liable to refund the purchase price,” it argued.
Estimates show BlockFi owes up to $10 billion to over 100,000 creditors including $1 billion to its three largest creditors and $220 million to bankrupt crypto hedge fund 3AC.
BlockFi claimed 3AC committed fraud with the money it borrowed and argued it also shouldn’t be entitled to a potential repayment.
BlockFi claims its litigation with FTX, 3AC and other firms could cost it up to $1 billion — impacting the amount its creditors are owed.
Related: BlockFi opens crypto withdrawals for eligible US users following court order
Several BlockFi creditors previously accused the firm of overlooking several red flags before transacting with FTX and its trading firm Alameda Research in the months prior to FTX’s collapse in November 2022.
Despite this, creditors settled with BlockFi last month to move forward with a repayment plan.
BlockFi filed for Chapter 11 bankruptcy on Nov. 28, about two weeks after FTX similarly filed for bankruptcy.
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Wes Streeting has paid tribute to Angela Rayner and said Labour “wants her back and needs her back”.
The health secretary heaped praise on his former cabinet colleague during a wide-ranging speech at the annual party conference, which was packed with attacks on Reform UK leader Nigel Farage.
Ms Rayner resigned as deputy party leader and housing secretary after a row about her tax affairs earlier this month.
Politics Live: Day three of annual Labour conference
Addressing members gathered in Liverpool, Mr Streeting said Labour’s new fair pay agreement for care workers could not have been achieved without her.
He said: “There’s someone else who’s made a real difference, who understands the struggle care workers face because she was one.
“She brought that experience to the cabinet table as the care worker who became our country’s deputy prime minister. Angela Rayner, this achievement is yours. Thank you.”
There was a big round of applause as Mr Streeting added: “And we want her back as well. We’ll definitely make sure she sees that. We need her back.”
Angela Rayner resigned earlier this month. File pic: AP
The message could be seen as trying to get grassroots members onside amid grim polling predictions for Labour and questions over whether Sir Keir Starmer can survive.
Ms Rayner is popular with the Labour membership – they elected her as deputy leader in 2020, but she gave up this position as well as her cabinet roles when it emerged she had underpaid stamp duty on a flat in Hove.
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In his speech, Mr Streeting also praised the Unison and GMB unions for standing up for care workers.
However, that was as far as his good will stretched – as he launched several stinging attacks on his opponents.
Farage ‘snake oil salesman’
The cabinet minister, seen as one of the government’s best communicators, accused Mr Farage of being the “snake oil salesman” of British politics and vowed to send him “packing” at the next election.
He argued that while Labour wants to modernise the NHS – with plans for an “online” hospital – the Reform leader wants an insurance system that “checks your pockets before your pulse”.
“It might be right for Mr Moneybags. We know he can afford it. But what about those who can’t?” Mr Streeting asked.
“Be in no doubt. It’s not reform he’s offering. It’s a retreat. If that’s the fight Farage wants, I say bring it.”
Mr Farage has previously spoken about being open to an insurance based model for the NHS, drawing a big dividing line with the Labour Party, which founded the National Health Service after the Second World War.
Mr Streeting said the party must win another fight too, “against the poison of post-truth politics”.
He pointed to Reform’s recent conference, where a “discredited doctor claimed that the COVID vaccine gave our Royal Family cancer“.
Nigel Farage said attacks on him were a ‘desperate last throw of the dice’. Pic PA
“This man wasn’t just some fringe figure, he’s Reform’s health adviser. These anti-vax lies have consequences, they’ve led to the return of diseases we thought we had defeated,” said Mr Streeting.
“Nigel Farage is a snake oil salesman of British politics and it’s time to stop buying what he’s selling.”
A Reform spokesperson previously said the doctor was a “guest speaker with his own opinions who has an advisory role in the US government”.
“Reform UK does not endorse what he said but does believe in free speech,” they added.
Trouble ahead
Mr Streeting’s speech reflects government efforts to ramp up its rhetoric against Reform UK, after two major polls predicted the insurgent party will win the next general election as fed-up voters abandon mainstream politics.
While that is many years away, some MPs see the devolved and local elections next May as a crunch test that could determine Sir Keir’s political survival.
Mr Streeting acknowledged this threat, saying it is not just Mr Farage Labour would “send packing”.
He said: “Whether it’s English nationalism with Reform, Scottish nationalism with the SNP or Welsh nationalism with Plaid we’ll take them all on.”
Mr Farage said attacks on him were a “desperate last throw of the dice” for a party in “deep trouble”, adding: “Never before have I seen one name that’s dominated a conference so much – yes it’s me, Nigel Farage.”
With about two weeks to go until Superintendent Adrienne Harris is expected to leave the NYDFS, she announced a two-year update to guidance for New York crypto users.
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