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BlockFi disputes repayment entitlement of FTX and Three Arrows Capital

BlockFi disputes repayment entitlement of FTX and Three Arrows Capital

BlockFi is arguing that its own creditors, not FTX’s, are the “ultimate victims” of FTX’s alleged fraud. The bankrupt cryptocurrency lender is trying to block attempts by FTX and Three Arrows Capital to retrieve hundreds of millions of dollars to pay back their own creditors. BlockFi claims that FTX misappropriated $5 billion that it had lent to the exchange, causing harm to FTX’s creditors. BlockFi argues that its own creditors should not be pushed to the back of the line and that FTX’s claims should be disallowed under the doctrine of unclean hands. BlockFi also claims that FTX’s investment in the company was a “gamble” and that its creditors should not be liable for the failure of that gamble. BlockFi estimates that its litigation with FTX, 3AC, and other firms could cost it up to $1 billion, impacting the amount its creditors are owed.

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