BlockFi
Summary
BlockFi was a cryptocurrency lending platform founded in 2017 by Zac Prince and Flori Marquez, once valued at $3 billion. The company faced a $100 million SEC and state regulator settlement in February 2022 for offering unregistered securities, then collapsed in November 2022 following the implosion of FTX, which had extended BlockFi a $400 million credit facility. After filing Chapter 11 bankruptcy, BlockFi achieved a notable outcome: all creditors received 100% recovery of allowed claims, funded largely by a $874.5 million settlement with FTX/Alameda Research.
No evidence submitted yet — be the first.
Editorial decisions, corrections, and updates are anchored on Solana.
Background and Founding
BlockFi was founded in 2017 by Zac Prince and Flori Marquez and headquartered in Jersey City, New Jersey. The company operated as a cryptocurrency lending platform, beginning fiat cash lending against crypto collateral in January 2018. BlockFi offered retail users yield-bearing accounts, crypto-backed loans, and eventually a cryptocurrency rewards credit card. The company raised $1.6 million in a seed round led by ConsenSys Ventures in 2018, and by March 2021 had reached a $3 billion valuation after closing a $350 million Series D funding round. Zac Prince served as CEO throughout the company's existence; prior to founding BlockFi, he held business development roles at AdMeld (acquired by Google), Sociomantic Labs (acquired by DunnHumby/Tesco), Orchard Platform, and Zibby.
- [1]MEDBlockFi - Wikipediaother
- [2]MEDBlockFi lands a $350M Series D at a $3B valuation - TechCrunchnews article
SEC and State Regulator Settlement ($100 Million, February 2022)
On February 14, 2022, the U.S. Securities and Exchange Commission (SEC) and the North American Securities Administrators Association (NASAA) jointly announced a $100 million settlement with BlockFi Lending, LLC. The SEC charged BlockFi with three violations: (1) offering and selling unregistered securities in the form of its BlockFi Interest Accounts (BIAs); (2) failing to register as an investment company under the Investment Company Act; and (3) making materially false and misleading statements about the level of risk in its loan portfolio, specifically misrepresenting that institutional loans were overcollateralized when a significant portion were not. BlockFi paid $50 million directly to the SEC and $50 million to 32 U.S. states. Under the settlement terms, BlockFi agreed to cease offering or selling BIAs in the United States but allowed existing BIA investors to continue earning interest. The company also committed to registering a new compliant lending product, designated BlockFi Yield. The $100 million penalty was at that time the largest recorded against a crypto firm by U.S. regulators. The SEC's cease-and-desist order was issued without BlockFi admitting or denying the findings.
Three Arrows Capital Exposure (June 2022)
In June 2022, BlockFi confirmed that it had liquidated positions belonging to a 'large client' that had failed to meet margin call obligations on an overcollateralized loan. Reports identified the client as Three Arrows Capital (3AC), a crypto hedge fund that collapsed amid the broader crypto market downturn of mid-2022. CEO Zac Prince stated that BlockFi 'fully accelerated the loan and fully liquidated or hedged all the associated collateral,' and BlockFi's chief risk officer noted the firm was among the first lenders to take action against 3AC. While BlockFi asserted that it had managed its exposure, the 3AC episode contributed to broader stress on the company's liquidity, leading it to seek external financing.
- [1]MEDBlockFi Liquidated Three Arrows Capital: Report - CoinDesknews article
- [2]HIGHHow the fall of Three Arrows, or 3AC, dragged down crypto investors - CNBCnews article
FTX Bailout and Acquisition Option (July 2022)
In July 2022, FTX (through its U.S. affiliate West Realm Shires Inc.) extended a $400 million revolving credit facility to BlockFi and negotiated an option to acquire BlockFi for a variable price of up to $240 million based on performance triggers. The arrangement came as BlockFi faced a surge in customer withdrawals following the collapse of Celsius Network, another crypto lender. The credit facility was subordinate to all client funds. At the time of BlockFi's bankruptcy filing in November 2022, approximately $275 million of the credit facility had been drawn. The FTX rescue arrangement, intended to stabilize BlockFi, instead deepened the company's exposure to FTX, which itself collapsed weeks later.
FTX Collapse and BlockFi Bankruptcy (November 2022)
FTX filed for Chapter 11 bankruptcy on November 11, 2022. Days later, BlockFi disclosed that it had significant exposure to FTX and its affiliates, including crypto assets held in custodial accounts at FTX. BlockFi suspended withdrawals and platform activity on November 10, 2022. On November 28, 2022, BlockFi filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court, District of New Jersey, listing more than 100,000 creditors. The company also filed a lawsuit against FTX's Sam Bankman-Fried related to Robinhood shares that Bankman-Fried had pledged as collateral. CEO Zac Prince later testified in the criminal trial of Sam Bankman-Fried that BlockFi would not have gone bankrupt had it not lost access to its funds held at FTX.
Silicon Valley Bank Exposure (March 2023)
During bankruptcy proceedings in March 2023, it was revealed that BlockFi held approximately $227 million in uninsured funds in a money market mutual fund (MMMF) offered through Silicon Valley Bank (SVB), which was seized by California regulators on March 10, 2023. The U.S. Trustee overseeing BlockFi's bankruptcy case disclosed this exposure. The funds were managed by third-party asset managers including BlackRock, Morgan Stanley, and Western Asset Management, and the direct risk to BlockFi was assessed as most likely limited to fund performance rather than SVB's institutional failure. However, the disclosure added further uncertainty to BlockFi's bankruptcy proceedings.
Bankruptcy Plan Confirmation and 100% Creditor Recovery
On October 3, 2023, the U.S. Bankruptcy Court for the District of New Jersey confirmed BlockFi's reorganization plan. The plan became effective on October 24, 2023, and the company began winding down operations. Distributions to U.S. customers in the Convenience Class (claims under $3,000) commenced in February 2024 at a flat 50% cash payout pending further asset recovery. In March 2024, BlockFi's plan administrator reached a settlement with FTX, securing $874.5 million in claims against FTX and its affiliate Alameda Research. Following a competitive sale process that closed in July 2024, those FTX claims were sold at a premium above face value to a third party. On September 6, 2024, the plan administrator announced that all allowed creditor claims would receive 100% recovery, with total distributions exceeding $1 billion. This outcome was managed across multiple jurisdictions including the United States, Bermuda, and Antigua by law firm Haynes Boone. International customers faced additional documentation requirements and longer timelines due to regulatory compliance obligations.
- [1]MEDHaynes Boone Secures 100% Recovery for BlockFi Creditorsother
- [2]MEDBlockFi can begin repaying creditors after emerging from bankruptcy - The Blocknews article
- [3]MEDBlockFi completes sale of FTX claims, prepares for final creditor distributions - The Blocknews article
- [4]MEDBlockFi Plan Administrator Announces Claims Sale and Full Customer Recovery - PR Newswireofficial
- [5]MEDBlockFi Repayments to Its 100,000 Creditors Will Begin This Month - Decryptnews article
Timeline
2017-01-01
BlockFi founded by Zac Prince and Flori Marquez in Jersey City, New Jersey.
BlockFi - Wikipedia2022-02-14
SEC and 32 state regulators announce $100 million settlement with BlockFi over unregistered BlockFi Interest Accounts (BIAs) and material misstatements.
SEC.gov2022-06-16
BlockFi confirms it liquidated Three Arrows Capital positions after 3AC failed to meet margin call obligations.
CoinDesk2022-07-01
FTX (West Realm Shires Inc.) extends $400 million revolving credit facility to BlockFi and signs option to acquire BlockFi for up to $240 million.
TechCrunch2022-11-10
BlockFi suspends withdrawals and platform activity following FTX's collapse, citing significant exposure to FTX and its affiliates.
NPR2022-11-28
BlockFi files Chapter 11 bankruptcy in U.S. Bankruptcy Court, District of New Jersey, listing over 100,000 creditors.
NPR2023-03-10
Silicon Valley Bank is seized by California regulators; BlockFi disclosed as having $227 million in uninsured MMMF funds at SVB.
The Block2023-10-03
U.S. Bankruptcy Court, District of New Jersey, confirms BlockFi's reorganization plan.
Official Committee of Unsecured Creditors of BlockFi2023-10-24
BlockFi's bankruptcy plan becomes effective; company begins winding down operations.
The Block2024-02-01
BlockFi begins initial Convenience Class distributions (50% cash payout for claims under $3,000).
Official Committee of Unsecured Creditors of BlockFi2024-03-01
BlockFi plan administrator settles with FTX estate, securing $874.5 million in claims against FTX and Alameda Research.
Haynes Boone2024-07-10
Sale of FTX claims to third-party buyer closes at a premium above face value, generating funds sufficient for full creditor recovery.
The Block2024-09-06
Plan administrator announces 100% recovery of all allowed claims for BlockFi creditors, with total distributions exceeding $1 billion.
PR Newswiremodel: claude-code-investigator
generated: 5/8/2026, 2:30:44 AM
last updated: 5/8/2026, 2:42:01 AM
avoid.net — verified advice for a post-truth world