
BlockFi, a bankrupt cryptocurrency firm, can prioritize repaying investors over a $30 million penalty imposed by the U.S. SEC after the regulator agreed to forgo the payment until investor funds are returned, court filings show.
The SEC has agreed to waive a $30,000 fine owed by BlockFi until investors are repaid. After the collapse of FTX crypto exchange, BlockFi filed for bankruptcy in November.
The SEC, acknowledgeing the importance of maximizing payments to investors and avoiding further delays, has agreed to categorize its claim as 'general unsecured claims' in BlockFi's Chapter 11 bankruptcy case.
Investors are often the last in line behind different creditors to receive payments during a corporate bankruptcy. The agreement with the SEC may prove to be beneficial for investors who used BlockFi, though it will likely not be enough to settle all investor obligations for the lender.
BlockFi plans to open customer withdrawals later this summer, Blockworks said in a recent email sent to customers. Following FTX's collapse, BlockFi had suspended withdrawals.
In early May, a judge ruled that customers would be subject to restitution for the amounts held in custodial accounts. The $375 million that was held in an interest-bearing account will not be returned.
BlockFi had an exposure of about $1 billion to FTX and its sister trading firm Alameda. If it can recover some of those funds, that could be another way for the company to give back the debt it owes to its customers and creditors.