A sealed settlement resolving disputes between crypto lender BlockFi and defunct crypto hedge fund Three Arrows Capital (3AC) has received approval from Judge Michael Kaplan in the New Jersey Bankruptcy Court. The settlement details remain undisclosed per the judge’s order during a hearing on February 6th.
The approval of the settlement aims to conclude ongoing legal battles between the two companies. BlockFi had claimed $129 million owed by 3AC, while the hedge fund argued BlockFi owed them $280 million.
Judge Kaplan defended the sealing of the agreement, stating that unsealing would be counter-intuitive. The U.S. Trustee’s objection for disclosure was rejected.
BlockFi’s motion to seal certain information was granted by the court, citing commercial sensitivity and potential impact on litigation involving bankrupt crypto exchange FTX.
With the settlement approved, BlockFi can proceed with distributing assets from the lending estate to creditors. This step was prompted by BlockFi’s swift approval request.
In September 2023, Judge Kaplan approved BlockFi’s amended Chapter 11 and customer repayment plan. At that time, 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 FTX’s downfall.
In October last year, Su Zhu, co-founder of Three Arrows Capital, was arrested in Singapore while attempting to flee. Zhu and his business partner, Kyle Davies, were sentenced to four months in prison for contempt of court. They remain on the run from liquidators and authorities.
Both were also prohibited by the Monetary Authority of Singapore from floating regulated investments for nine years.