BlockFi ends $35m dispute with DOJ in closing chapter of bankruptcy

Bankrupt crypto lender BlockFi has dropped its yearlong lawsuit against the US government, closing a dispute over digital assets seized in connection with a criminal case.

In a court filing dated July 11, Plan Administrator Mohsin Meghji and the Department of Justice agreed to dismiss the case with prejudice, meaning it cannot be refiled.

The suit, filed in May 2023, accused the DOJ of violating bankruptcy protections by attempting to transfer control of crypto assets that may have belonged to the BlockFi estate.

The bankruptcy court rejected the DOJ’s motions to dismiss or move the case to district court, affirming its jurisdiction to determine whether the assets were estate property.

The dismissal clears one of the last hurdles in BlockFi’s wind-down.

After emerging from bankruptcy in October 2023, BlockFi began crypto distributions the following July, with US customers receiving funds first and non-US clients facing delays due to cross-border legal hurdles.

As of mid-2025, BlockFi said 97% of US users had claimed their distributions, compared to just 43% of non-US clients.

BlockFi filed for Chapter 11 in November 2022 following the collapse of Sam Bankman-Fried’s FTX and Alameda Research.

CEO Zac Prince later testified that Alameda’s balance sheet “appeared strong” when BlockFi extended the loan, but the firm ultimately returned just a fraction of the requested crypto, pushing BlockFi into insolvency.

Crypto market movers

• Bitcoin has lost 0.3% in value over the past 24 hours and is trading at $117,800.
• Ethereum is down 0.9% in the same period to $2,950.

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Kyle Baird is DL News’ Weekend Editor. Got a tip? Email at kbaird@dlnews.com.