FTX Rival BlockFi Reaches $13M Settlement in Investor Lawsuit, Paving Way for Relief

A New Jersey court has approved a $13 million settlement in the BlockFi investor lawsuit, marking a significant step toward resolving claims for over 89,000 affected customers. Judge Claire Cecchi ordered insurers to escrow the funds within 30 days, with final approval expected by December 11, 2025. The lawsuit alleged that BlockFi marketed unregistered securities and misled investors through false statements by executives. This development highlights ongoing regulatory scrutiny in the crypto lending sector and could set a precedent for similar cases, including those involving FTX. The settlement provides a measure of relief for investors while underscoring the importance of compliance in the rapidly evolving digital asset space.

US Judge Approves $13M BlockFi Settlement, Paving Way for Investor Relief

A New Jersey court has greenlit a $13 million settlement in the BlockFi investor lawsuit, marking a pivotal moment for over 89,000 affected customers. Judge Claire Cecchi mandated insurers to escrow funds within 30 days, with final approval slated for December 11. The resolution stems from allegations that BlockFi marketed unregistered securities and misled investors through false statements by executives.

The lawsuit, spearheaded by Trey Greene, accuses CEO Zac Prince and COO Flori Marquez of disregarding internal risk warnings while extending loans to Alameda Research—a MOVE that exacerbated BlockFi's collapse during 2022's crypto contagion. The firm's bankruptcy followed the domino effect triggered by Terra's implosion, which engulfed Celsius, Voyager, and FTX.

BlockFi's Chapter 11 plan includes an $875 million accord with FTX and Alameda to settle disputes, alongside ongoing efforts to reimburse customers. The settlement underscores the lingering fallout from crypto's credit crisis, where reckless lending practices met their reckoning.

Fenwick Law Firm Seeks Dismissal of FTX Fraud Allegations

Fenwick & West, the law firm formerly engaged by collapsed cryptocurrency exchange FTX, has moved to dismiss updated fraud allegations in a class-action lawsuit. The firm categorically denies any involvement in FTX's fraudulent activities, labeling the claims as legally flawed and untimely.

Plaintiffs allege Fenwick played a central role in enabling FTX's misconduct, citing evidence from ongoing bankruptcy proceedings. The law firm counters that these recycled accusations lack evidentiary support and improperly attempt to hold outside counsel liable for client actions. Legal services provided were routine and compliant with professional standards, according to court filings.

The dispute highlights lingering legal fallout from FTX's spectacular collapse, with plaintiffs now targeting peripheral service providers. Fenwick's dismissal motion argues the amended complaint fails to establish proximate causation - a legal requirement for third-party liability in fraud cases. The firm maintains it had no knowledge of FTX's alleged misconduct during their engagement.

Indian Crypto Exchanges Under Scrutiny for Misusing Client Funds

India's Income Tax Department has uncovered troubling practices among domestic cryptocurrency exchanges, where user assets are being leveraged for proprietary gains without consent or profit-sharing. The investigation reveals widespread use of rehypothecation—lending or staking deposited tokens to boost exchange liquidity while leaving clients exposed to undisclosed risks.

Terms of service loopholes enable these maneuvers, with most platforms claiming broad discretionary rights over user funds. The parallels to FTX's 2022 collapse are unmistakable, yet regulatory ambiguity hampers enforcement. Tax evasion concerns compound the problem, as exchanges reportedly generate undeclared income from trading parked assets.

This systemic vulnerability emerges as the government prepares the Income Tax Bill 2025, signaling potential regulatory reckoning for an industry operating in legal gray zones. Client assets remain unprotected, with no safeguards against commingling or speculative use by platforms.