Judge Approves $13M BlockFi Settlement, Paving Way for Investor Payouts
A U.S. federal judge has given preliminary approval to a $13 million settlement in the BlockFi investor lawsuit, offering long-awaited compensation for customers who lost funds in the collapsed crypto lender.
In a Thursday ruling, Judge Claire Cecchi of the District of New Jersey directed BlockFi’s insurers to transfer the settlement amount into escrow within 30 days. The move ends months of procedural delays triggered by objections from a dissenting investor. A final hearing to sign off on the deal is scheduled for December 11.
The settlement is aimed at more than 89,000 BlockFi users who held interest-bearing accounts between March 2019 and November 2022. These investors alleged that BlockFi marketed unregistered securities while senior executives misled customers about the company’s risk exposure.
The class-action lawsuit filed in 2023 claims that CEO Zac Prince and COO Flori Marquez disregarded internal warnings and issued risky loans to Alameda Research, a decision that contributed to BlockFi’s downfall amid the 2022 market crash.
BlockFi filed for bankruptcy following the collapse of Terra, which triggered a chain reaction that brought down Celsius, Voyager, and eventually FTX. Since then, the company has worked through a Chapter 11 restructuring plan aimed at returning assets to customers.
Last year, BlockFi struck an $875 million agreement with FTX and Alameda to resolve competing claims. However, the repayment process has been slow. In April, BlockFi’s estate confirmed via X (formerly Twitter) that “significant amounts of USD and crypto remain unclaimed” by eligible customers.
The case also highlights broader regulatory and law enforcement pressure on crypto misconduct. Just this week, Interpol announced the success of “Operation Serengeti 2.0,” which shut down 25 illegal crypto mining operations in Angola. Authorities seized $37 million worth of mining equipment, dismantled 45 unlawful power stations, and arrested more than 1,200 cybercriminals accused of targeting 88,000 victims worldwide.
For many investors, the BlockFi settlement represents not only long-delayed restitution but also a signal that courts are demanding accountability from crypto lenders. At the same time, regulators and law enforcement agencies continue stepping up enforcement to curb the systemic risks posed by reckless crypto practices.
