BlockFi Leaders, Account Customers Reach $13 Million Class Deal

The founders and several other directors and executives of now-bankrupt BlockFi Inc. have agreed to pay a class of interest account holders more than $13 million to settle securities fraud claims.

The agreement is an “outstanding” result for the BlockFi account holders and should be given preliminary approval, the lead plaintiffs told Judge Claire C. Cecchi of the US District Court for the District of New Jersey on Tuesday.

Distributions will be available to the 89,027 total account holders under the terms of the settlement, even though some lost their ability to bring claims against the individual defendants in the bankruptcy process, the plaintiffs said. And because of information and disputes already handled by the bankruptcy court, no claim forms are needed to participate in the settlement, and no claims reconciliation process is required, they said.

The customers alleged that BlockFi founders Zac Prince and Flori Marquez made misleading statements about how the platform worked, falsely assuring investors that their cryptocurrency wouldn’t transfer to BlockFi.

But contrary to those and other representations, the accounts allegedly weren’t as safe as bank accounts, the digital assets were loaned to third parties, and the leaders “made speculative and risky loans to companies with insurmountable liquidity problems,” like FTX-linked Alameda research, the lead plaintiffs said here in describing the allegations.

The complaint also named the Gemini Trust Co., run by twins Cameron and Tyler Winklevoss, as a defendant over its alleged partnership with BlockFi. But Gemini didn’t make an appearance in the case and isn’t among the settling defendants.

Counsel for the proposed class includes Pomerantz LLP and Squitieri & Fearon LLP. Archer & Greiner PC represents the defendants.

The case is Greene v. Prince, D.N.J., No. 2:23-cv-01165, motion 2/4/25.