The creditors of BlockFi, a digital asset lender, have filed for the liquidation of the company, accusing CEO Zac Prince and its management of fraud, dishonesty, and extortion. In a document filed late Tuesday evening in New Jersey Bankruptcy Court, the creditors claimed that the company’s higher management is intentionally delaying bankruptcy proceedings.
They allege that this delay is meant to negotiate legal releases for its senior authorities, who are responsible for loans made to FTX’s Alameda Research.
The creditors also state that, unlike other cases involving crypto wrong doing, BlockFi’s customers are unaware of the full story about the company. They believe it is time for unsecured creditors to uncover the truth about BlockFi, CEO Zac Prince, how much they personally profited from the business, and what he and his colleagues were doing behind the scenes.
According to the document filed on Tuesday evening, negotiations and mediations have failed, and liquidation should now proceed. The creditors emphasize that the monthly administrative costs amount to approximately $16 million, which includes paying salaries to over 100 individuals, some of whom are not actively engaged in resolving the bankruptcy but instead focus on personal activities like golf.
In response to the creditors’ filing, BlockFi’s higher management has submitted an updated plan under Chapter 11 of the Bankruptcy Code. They propose that customers who have money with BlockFi, totaling around $1 billion, may recover between 39% and 100% of their assets under the plan. Conversely, if the assets are liquidated, the recovery rate would be between 36% and 60%.