“It is time” for BlockFi creditors to know what BlockFi was and who former CEO “Zac Prince truly is,” BlockFi’s Official Committee of Unsecured Creditors said in a new court filing.
The UCC is pushing for the court to either appoint a Chapter 11 trustee, terminate the exclusivity periods for the debtors or convert the cases to Chapter 7 proceedings.
Voyager, Celsius and even FTX customers understand the majority of what happened to the respective companies through the collapses. However, the UCC argues, BlockFi customers do not yet have a clear understanding of what happened which is “facilitating case mischief.”
$16 million per month is being burned on BlockFi’s cases, according to the filing.
A Chapter 11 trustee is necessary, the UCC says, because “the Investigative Report reveals, in great detail, that BlockFi (Mr. Prince in particular) perpetrated a fraud on customers.”
Read More: How BlockFi Went From Tech Unicorn to Crypto Burnout
BlockFi’s debtors also “broke their own promises to customers by liquidating nearly $240 million in customers’ crypto.”
However, the Court could also open up the plan exclusivity. The UCC claims that BlockFi took too long to propose a plan — with the cases lasting seven months, with two plans “dead on arrival.”
The UCC also claims that the debtors “resorted to their illegal and utterly cockamamie solicitation (smear) campaign a month ago” which “spread lies” to the customer base — spanning over 600,000 investors — and skirted the UCC.
And, finally, the court could convert the case to a Chapter 7 case.
A Chapter 7 would allow for the liquidation of a “debtor’s nonexempt property and the distribution of the proceeds to creditors,” according to the US courts.
UCC says that mediations have now failed, and both the debtors and the UCC are “at a complete standstill” and the debtors “shill” for the insiders — which would include Prince.
This is not the first time that the debtors and creditors have had public disagreements. In February, debtors accused the creditors of being “divorced from reality” and the creditors accused the debtors of throwing a “temper tantrum.”
Last week, the SEC announced that it would “forego” the $30 million penalty from BlockFi until investors have been repaid. The bankrupt lender plans to open up customer withdrawals sometime this summer.
BlockFi filed for bankruptcy in November of last year after FTX collapsed.
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Source: https://blockworks.co/news/zac-prince-profited-from-blockfi