Creditors of the bankrupt cryptocurrency lending firm, BlockFi, have filed a court document alleging that the company used customer funds to purchase a $30 million insurance policy. This comes as a response to BlockFi’s Chapter 11 reorganization plan, which suggested that selling the company may not generate sufficient value for creditors. The creditors, represented by law firm Brown Rudnick, claim that BlockFi intentionally delayed the trial proceedings. They also argue that BlockFi sold around $240 million worth of cryptocurrencies at a low point in the market before declaring bankruptcy, leading to significant losses.
The creditors criticize the decision to sell the assets and question its relevance to the funding needs of the bankruptcy case. Additionally, they highlight that BlockFi used $22.5 million of customer funds to purchase the insurance policy shortly after selling the digital assets. The creditors call for the case to be concluded promptly and for the estate assets to be transferred to new management, suggesting that the current situation is incongruent with the debtors’ agenda. BlockFi has yet to respond to these claims.
