US Judge Approves Sealed Settlement Between BlockFi and Three Arrows Capital
A United States judge has given approval to a sealed settlement that resolves the claims and disputes between crypto lender BlockFi and defunct crypto hedge fund Three Arrows Capital (3AC).
Judge Michael Kaplan approved the settlement during a hearing on February 6th in the New Jersey Bankruptcy Court, but ordered that the details of the settlement remain undisclosed.
The approval of the settlement aims to put an end to the ongoing legal battles between the two companies.
BlockFi had claimed that 3AC owed them $129 million, while the hedge fund argued that BlockFi owed them $280 million.
Judge Says Unsealing Would be Counter-Intuitive
Although the settlement agreement remains sealed, Judge Kaplan defended the decision, stating that unsealing the details would be counter-intuitive.
The judge also rejected the objection raised by the U.S. Trustee, which argued for the disclosure of the terms.
BlockFi had filed a motion to seal certain information, citing its commercial sensitivity and potential impact on the litigation involving bankrupt crypto exchange FTX.
The court granted BlockFi’s motion to seal, emphasizing the importance of protecting settlement strategies and respecting the foreign bankruptcy proceeding of 3AC.
— Moby Media (@mobymedia) February 7, 2024
With the settlement now approved, BlockFi can proceed with the distribution of assets from the lending estate to its creditors, a crucial step that prompted the company to seek swift approval.
Judge Kaplan had previously approved BlockFi’s amended Chapter 11 and customer repayment plan in September 2023 when the company received clearance for liquidation.
At that time, it was estimated that BlockFi owed over $10 billion to more than 100,000 creditors, including $1 billion to its three largest creditors and $220 million to 3AC.
Three Arrows Capital collapsed in June 2022, while BlockFi filed for bankruptcy in November 2022 following the downfall of FTX.
3AC Co-Founder Arrested on Flee Attempt
In October last year, Su Zhu, the co-founder Three Arrows Capital (3AC), was arrested in Singapore while attempting to flee.
According to a disclosure made by Teneo, the fund’s liquidator, Zhu was detained at the Changi airport after a committal order was issued on him and his business partner, Kyle Davies.
“(Zhu) was apprehended at Changi Airport whilst attempting to travel out of Singapore following a committal order granted by the Singapore Courts against him,” the announcement read.
Zhu and his business partner, Kyle Davies, were sentenced to four months in prison through a committal order for contempt of court.
The former Three Arrow executives were issued subpoenas to cooperate with the investigations and activities of Teneo in unraveling issues that led to the implosion of the fund.
Although active on social media in the aftermath of the collapse, Zhu and Davies remain on the run from the firm’s liquidators and authorities.
Both were also prohibited by the Monetary Authority of Singapore from floating regulated investments for nine years.
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