BlockFi Bankruptcy Lawsuit Dismissed Amid DOJ Settlement

By: Isha Das

In recent developments concerning the collapsed crypto lending firm BlockFi, the bankruptcy administrator and the United States Department of Justice (DOJ) have reached a pivotal agreement to dismiss a lawsuit aiming to seize $35 million in digital assets. This settlement, approved by Judge Michael B. Kaplan from the US Bankruptcy Court for the District of New Jersey, signifies a crucial step in the ongoing wind-down process of BlockFi’s operations following its descent into bankruptcy.

The lawsuit, initiated in May 2023, demanded the transfer of over $35 million worth of cryptocurrency from BlockFi to the US government. The DOJ claimed the right to seize these funds under warrants related to a criminal fraud investigation concerning two Estonian nationals. The case, however, was not connected to the financial troubles at BlockFi, which fell into bankruptcy amid a broader downturn in the crypto market.

This settlement marks a significant reduction in legal disputes encircling BlockFi and allows the company's bankruptcy team to proceed with addressing claims from creditors more efficiently. With this lawsuit out of the way, BlockFi can now focus on restructuring and eventually settling other outstanding obligations.

In another notable legal case in the crypto space, SIM swapper Nicholas Truglia has been resentenced to 12 years in prison, following his failure to comply with a restitution order. Truglia had originally been sentenced to 18 months for orchestrating a scam that netted him $20 million in cryptocurrencies from a victim named Michael Terpin. This lengthier sentence emphasizes the judiciary's stance on crypto-related crimes, highlighting the severe consequences for offenders. More coverage on cryptocurrency regulations can be found via DOJ's official communications.