US court signs off on $13M BlockFi settlement after objection withdrawn

A New Jersey judge just gave the green light for a $13M settlement between investors and crypto lender BlockFi, ending months of delays. Judge Claire Cecchi ordered BlockFi's insurers to cough up the cash within 30 days into an escrow account, part of a class-action suit filed back in 2023. This comes after a February motion was stalled by a single investor's objection—now withdrawn, clearing the path forward.

A Dec. 11 hearing is set for final approval, where any remaining objections will be hashed out. Over 89,000 users who held interest accounts from March 2019 to BlockFi's November 2022 bankruptcy are eligible for payouts. This lawsuit erupted amid the crypto market crash triggered by Terra's collapse, which also took down giants like FTX, Celsius, and Voyager.

The initial complaint, led by investor Trey Greene, accused BlockFi of selling unregistered securities through 'misrepresentations and material omissions' from ex-CEO Zac Prince, COO Flori Marquez, and Gemini Trading. Bankruptcy filings even claim Prince ignored risk management warnings about lending to Alameda Research, fueling BlockFi's downfall.

Beyond this suit, BlockFi's been scrambling to return user crypto. Their Chapter 11 plan got court approval in September 2023 to repay 10,000+ creditors, and they settled with FTX and Alameda for $875M to wrap up claims. In an April 2 X post, BlockFi urged users: 'The BlockFi Estate is working to make ALL final distributions. There are still significant amounts of USD and crypto that have not been claimed by customers.'