FTX, Three Arrows, and SEC oppose BlockFi’s bankruptcy plans.

According to a legal filing made by FTX on Wednesday, proposals made by defunct crypto lender BlockFi are seen as an abuse of bankruptcy rules. Over a billion dollars of disputed transactions are at stake. The plans put forward by BlockFi, which are set to be discussed in a court hearing in New Jersey on July 13, are also opposed by liquidated hedge fund Three Arrows Capital (3AC) and the Securities and Exchange Commission (SEC), a federal regulator.

FTX, who bailed out the troubled lender last year before filing for bankruptcy themselves in November, claims that their substantial claims against BlockFi have been unjustly downgraded by the proposed plan. FTX stated, “BlockFi Debtors believe some bankruptcy wand can be waived to make the FTX Debtors’ claims disappear… without satisfying basic procedural fairness and due process requirements” in a proposed wind-up plan filed in June. FTX further added, “This is abuse of the plan process.”

FTX highlights that there are hundreds of millions of dollars of repayments and collateral linked to a loan with FTX’s trading arm Alameda Research, as well as $1 billion in collateral pledges made by Emergent Fidelity, a company established by FTX chief Sam Bankman-Fried to hold shares in Robinhood (HOOD).

These filings are an attempt to untangle complex financial transactions among crypto companies currently undergoing separate bankruptcy cases as they strive to repay customers and other creditors. BlockFi may also have claims against FTX in parallel proceedings taking place in Delaware, to which FTX’s lawyers “expect to object,” according to the filing.

Three Arrows Capital, who claims to be owed over $220 million by BlockFi, also protested that it was not given an opportunity to contest fraud allegations. The SEC, on the other hand, stated that proposed clauses to release BlockFi and its management were overly vague and broad.

Similar objections were raised by the SEC regarding crypto lender Voyager, leading to legal delays and causing Binance.US to withdraw its offer to acquire the company. BlockFi’s creditors have also argued that its bankruptcy plan is an expensive and intricate way to absolve executives from legal responsibility for poor financial decisions, suggesting that the company should simply be liquidated.

Read more: ‘End the Extortion:’ BlockFi Creditors File to Liquidate Estate

Edited by Parikshit Mishra.

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