BlockFi’s $13.2 Million Class Action Settlement Nears Final Approval - Crypto Investors Watch Closely
Crypto lending giant BlockFi moves toward resolving massive legal battle as settlement gets judicial nod.
The Numbers Don't Lie
Thirteen point two million dollars—that's the price tag for peace in this courtroom drama. The proposed settlement, now cruising toward final approval, represents one of the largest class-action resolutions in crypto lending history. Investors who got burned during BlockFi's turbulent period finally see light at the end of the tunnel.
Behind the Legal Curtain
Plaintiffs alleged misleading practices around yield accounts and loan services. BlockFi maintains its innocence while pragmatically choosing settlement over protracted litigation. The court's preliminary approval signals strong confidence in the agreement's fairness—a rare moment of consensus in typically contentious crypto litigation.
Industry Implications
This settlement sets precedent for how crypto platforms handle user disputes. Other lending services watch closely as regulatory scrutiny intensifies across decentralized finance. The resolution demonstrates that traditional legal frameworks can indeed catch up with blockchain innovation—sometimes with multi-million dollar consequences.
Because nothing says 'financial innovation' like writing eight-figure checks to make lawsuits disappear—the crypto industry's favorite customer retention strategy.
BlockFi settlement opens door for individual investor claims
The settlement is currently limited to interest-bearing account holders but leaves open the possibility of individual claims.
“Those who have opted out of class settlements can pursue an individual claim and seek compensation for specific harm, rather than being bound by the terms of the class settlement,” explained Navodaya Singh Rajpurohit, a partner at Coinque Consulting.
Most investors are expected to retain their positions in the settlement class, as the agreement represents one of the few concrete avenues for recovering lost funds.
BlockFi’s implosion left account holders with little to zero access to their crypto holdings at a time when digital asset prices were already falling sharply.
BlockFi’s bankruptcy was one episode in a several instances of crypto businesses collapsing, which swept through the digital asset sector in 2022. The lender, headquartered in New Jersey, had marketed its interest accounts as a reliable way for users to earn yield on their cryptocurrency holdings.
But when TerraUSD, a so-called algorithmic stablecoin created by Do Kwon’s Terraform Labs, collapsed in May 2022, it triggered a domino effect that undermined the financial foundations of many crypto firms. Do Kwon pled guilty to fraud over the fall of the stablecoin, as covered by Cryptopolitan last week.
BlockFi’s founders, Zac Prince and Flori Marquez, had assured customers that their deposits were SAFE and comparable to those in regulated bank accounts. In practice, however, the company loaned customer assets to outside firms, including Alameda Research, the trading affiliate of FTX.
Plaintiffs alleged that BlockFi leaders made “speculative and risky loans to companies with insurmountable liquidity problems,” leaving investors exposed when the market turned.
The complaint also included Gemini Trust Co., founded by Cameron and Tyler Winklevoss, as a defendant due to its ties to BlockFi, but the firm never made an appearance in the case and is not part of the settlement agreement.
Other entities, including Crypto lender Celsius Network froze withdrawals in June 2022 before filing for bankruptcy a month later. Voyager Digital, another high-profile lender, collapsed around the same time, also stranding customers who had deposited billions in digital assets.
The most dramatic downfall came in November 2022 with the collapse of FTX, once one of the world’s largest exchanges. FTX’s implosion sent shockwaves through the industry and revealed the extent of interconnected lending practices between companies like BlockFi, Celsius, and Alameda Research.
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