BlockFi executives had to repay an amount of 15 million USD to an investor for the settlement of a threatened lawsuit, according to the report citing BlockFi attorneys during bankruptcy court hearing. It was due to the cratering equity value of the company during summer of last year.
Reuters reported, the investor called “Counterparty A” claimed to purchase executive compensation packages issued equity shares which is now resolved. Attorney from BlockFi, Joshua Sussberg told this during the hearing at bankruptcy court in Trenton, New Jersey.
During January 2022, shares of the company, whose valuation is between 6 billion USD to 8 billion USD, were trading at discount. However, the value of these shares witnessed significant drops in their value following the collapse of Terra network’s native cryptocurrencies—UST stablecoin and LUNA.
Sussberg stated that given this, the crypto lender investor is frightened to file a lawsuit while putting allegations against BlockFi and its executives asking to be more transparent regarding the risk involved within the crypto market.
Although the company thought the claims of investors to be deceptive, both parties went on to get into a confidential settlement in August 2022. Within the settlement conditions, the investor received 15 million USD from BlockFi executives. Founder of crypto lending platform, Zac Prince had the biggest share of 6.144 million USD in the amount repaid to the investor.
With the decline in its value, the company went on to lay off about 20% of its workforce.
The attorney continued that BlockFi is likely to seek the approval from court regarding an bonus package for employees in order to refrain the possibility of their leaving the company given the bankruptcy proceedings. In addition, it also asked for compensation to those who were paid the company equity.
On November 28, 2022, the New Jersey headquartered crypto lending firm filed for bankruptcy. The action came in the wake of the aftermath of the Bahamian crypto exchange FTX’s abrupt collapse. With the crypto exchange filing bankruptcy, founder and then CEO Sam Bankman-Fried also stepped down from his position.
Bahamian police later arrested Bankman-Fried and extradited to the United States for the arraignment of the eight count of charges against him. At present he is on the 250 million bond bail and did not plead guilty.
Source: https://www.thecoinrepublic.com/2023/01/11/blockfi-compensated-investor-15mn-usd-says-attorney/