Reporting from our crypto legal desk: BlockFi's bankruptcy team just scored a major victory by settling a $35 million lawsuit with the U.S. Department of Justice. For anyone who lost money in crypto's turbulent 2022 crash, this legal breakthrough could speed up your repayments. Here's what the resolution means for everyday investors still waiting on funds.
The Legal Breakthrough Explained
A New Jersey bankruptcy judge officially closed the case on Friday after both sides agreed to walk away. The lawsuit started when DOJ tried to seize $35 million in crypto from BlockFi accounts tied to two Estonian men accused of fraud. BlockFi argued these funds should be protected under bankruptcy rules. After two years of legal back-and-forth, both sides decided to end the fight permanently. The case is now "dismissed with prejudice" – meaning it's dead and buried forever.
Why This Matters for Crypto Holders
This settlement clears one of the last big legal hurdles blocking repayments. BlockFi's bankruptcy team can now focus fully on returning money to over 100,000 creditors owed nearly $10 billion. While 90% of U.S. customers have already received some funds, international clients lag at just 43% repaid. With this lawsuit resolved, more money can flow to creditors instead of lawyers.
BlockFi's Road to Recovery
The crypto lender's collapse started when FTX imploded in November 2022. Since then, BlockFi has been:
- Settling with big players (like their $875 million deal with FTX)
- Partnering with Coinbase for customer withdrawals
- Setting deadlines for claims (April 2024 was the cutoff)
This DOJ settlement marks another critical step toward wrapping up one of crypto's biggest bankruptcies.
The Bigger Picture for Crypto
Legal experts see this as part of a pattern where regulators and crypto firms avoid messy court battles. Like recent settlements with Gemini and other bankrupt platforms, it suggests officials recognize the need to get money back to consumers quickly. For the wider market, fewer legal clouds mean more stability – especially as Bitcoin and Ethereum prices continue their 2025 recovery.
What Happens Next
BlockFi's administrator Mohsin Meghji can now push full speed on repayments without courtroom distractions. If you're still waiting on funds, watch for updates through official channels. While no bankruptcy returns 100% of losses, this settlement improves chances for better recoveries.
