A bankruptcy judge has turned down Three Arrows Capital’s request to move forward with their claim against BlockFi, and, instead, have instructed to set up a mediation process to try and resolve their dispute over a significant $284 million. This mediation, aimed at avoiding a February court hearing, is scheduled for January.
BlockFi, a crypto lender, and Three Arrows Capital are at odds over “preferential payments” that Three Arrows Capital made to BlockFi. Preferential payments are payments made just before a company files for bankruptcy, potentially giving the recipient better compensation than they might receive through the normal legal process. In this case, Three Arrows Capital claims they made around $270 million in such payments to BlockFi, which is more than initially disclosed.
The heart of the issue revolves around determining when Three Arrows Capital became insolvent and how this timing relates to the payments they made to BlockFi. The judges are keen to resolve this situation quickly, as it involves substantial sums of money.
There’s some tension between the two parties, with BlockFi accusing Three Arrows Capital of prolonging the legal process and running up over $16 million in legal bills. Three Arrows Capital’s lawyer countered, mentioning that the founders of their firm had left and were unresponsive, leaving them to sort out records, locate assets, and secure them for creditors. This disagreement is an ongoing legal battle that involves substantial amounts of money and complex financial matters.
