BlockFi Settlement

About BlockFi Settlement

BlockFi settled with the SEC and state regulators for 100 million in February 2022, before its bankruptcy. The settlement addressed charges that BlockFi had not registered its lending product as a security. Despite the settlement, BlockFi continued operating until the FTX collapse cut off its funding. The BlockFi case illustrates how regulatory action and counterparty risk combined to destroy a company. BlockFi emerged from bankruptcy in September 2024. The estate recovered assets from FTX and other counterparties. Creditors received approximately 100 percent of claims. The fast recovery was due to the short duration between the filing and recovery of assets, primarily cryptocurrency that appreciated in value.