FTX and Three Arrows Capital (3AC) liquidators oppose BlockFi’s Motion for Entry of an Order that, in part, recharacterizes claims for the purpose of including them in a liquidation schedule.

According to FTX, BlockFi is lumping FTX claims into a Liquidation Plan instead of allowing FTX to dispute them. Disputes will require judges to “assess novel questions of law” and a “complicated factual record.”

The collapsed Bahamian exchange said BlockFi should pursue revised claims in a separate adversarial proceeding or another plan.

“This is necessary to ensure that the Court provides for a fair, appropriate, and reasonable adjudication of the FTX Claims.”

According to the objection, the fate of certain claims is tied to assets whose status will be decided at former FTX CEO Sam Bankman-Fried’s trial in October.

Among the assets whose ownership is uncertain are 56 million Robinhood shares Bankman-Fried bought with funds borrowed from Alameda Research. Alameda Research was FTX’s primary market-maker which collapsed with the exchange last year.

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Bankman-Fried also extended a $250 million revolving credit line to BlockFi after several major crypto companies collapsed last year.

Compounding BlockFi’s problems is another objection to its proposed liquidation plan from bankrupt hedge fund Three Arrows Capital.

3AC Liquidators refuse to accept BlockFi’s subordination of a $220 million loan into its liquidation plan. Their objection upholds the immunity 3AC’s US assets enjoy under Chapter 15 bankruptcy law.

In a separate filing, the US Securities and Exchange Commission argues that BlockFi did not specify the particulars of staff it wishes to release from the liability of pre-bankruptcy decisions.

“The Debtors need to provide more detailed information about such broad releases to permit affected stakeholders to make an informed decision with respect to the Plan.”

The SEC asked the court to deny approval of the Disclosure Statement Motion in the Entry Order until BlockFi sufficiently addressed these and other issues.

Last month, BlockFi’s Unsecured Creditors’ Committee accused its CEO and the debtor of enriching insiders at the expense of creditors.

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The post FTX Opposes Downgrading of Claims in BlockFi Bankruptcy Plan  appeared first on BeInCrypto.

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