BlockFi’s bankruptcy estate and the U.S. Department of Justice have reached a final agreement to dismiss a $35 million lawsuit over seized crypto funds, bringing an end to a year-long legal dispute.
Approved by U.S. Bankruptcy Judge Michael B. Kaplan in New Jersey, the settlement resolves a May 2023 lawsuit that stemmed from DOJ efforts to confiscate funds from BlockFi accounts belonging to two Estonian nationals tied to an unrelated fraud case. The DOJ had argued the bankruptcy court lacked jurisdiction to block the seizure.
Under the settlement, the case is dismissed with prejudice, meaning it cannot be refiled. Both sides will bear their own legal expenses. Mohsin Meghji, overseeing the wind-down of BlockFi’s bankruptcy estate, represented the crypto lender, while the DOJ’s legal team was led by Seth B. Shapiro of the Commercial Litigation Branch.
The lawsuit had complicated BlockFi’s ongoing efforts to return assets to customers, many of whom were left in limbo following the firm’s collapse in late 2022. The settlement now removes a key legal roadblock in the wind-down process and paves the way for continued asset recovery efforts.
BlockFi filed for Chapter 11 protection following the downfall of FTX, one of its major financial backers. Since then, it has worked with Coinbase to facilitate customer withdrawals, offering access to funds through the exchange. Customers with interest accounts, loans, or private portfolios were given until April 28, 2024, to reclaim their assets.
Kosta Gushterov
Reporter at Coindoo
Kosta joined the team in 2021 and quickly established himself with his thirst for knowledge, incredible dedication, and analytical thinking. He not only covers a wide range of current topics, but also writes excellent reviews, PR articles, and educational materials. His articles are also quoted by other news agencies.
Source: https://coindoo.com/judge-approves-blockfi-doj-deal-over-seized-crypto-funds/