BlockFi Inc. et al v. Greene et al

On March 13, 2023, Blockfi Inc., Blockfi Trading, LLC, Blockfi Lending LLC, Blockfi Wallet LLC, Blockfi Ventures LLC, Blockfi International Ltd., Blockfi Investment Products LLC, Blockfi Services, Inc., and Blockfi Lending II LLC (collectively, “Plaintiffs”), represented by Michael D. Sirota and Warren A. Usatine of Cole Schotz P.C.; Joshua A. Sussberg and Christine A. Okike of Kirkland & Ellis LLP; and Richard S. Kanowitz, Charles M. Jones II, and Aimee M. Furness of Haynes And Boone, LLP, filed a bankruptcy lawsuit against Trey Greene and Antonie Elas (collectively, “Defendants”), seeking injunctive and declaratory relief staying the prosecution of the Lawsuit. This case was filed in the U.S. Bankruptcy Court for the District of New Jersey, with Judge Michael B. Kaplan presiding.

In the complaint, the plaintiffs stated, “Certain of the Debtors’ officers, directors, and former employees have been named as defendants in two putative class-action lawsuits – one filed in New Jersey and the other in Massachusetts – related to BlockFi Interest Accounts (‘BIAs’).”

Plaintiffs alleged that “On November 28, 2022 (the ‘Petition Date’), BlockFi and its debtor affiliates as debtors and debtors-in-possession each filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code thereby commencing the Chapter 11 Cases.”

The plaintiffs then alleged that “BlockFi Inc. was founded in 2017 by Zac Prince and Flori Marquez to provide credit services to markets with limited access to simple financial products. Certain of the Debtors’ directors, officers, and former employees have been named as defendants in putative class-actions in New Jersey and Massachusetts.”

Plaintiffs further alleged, “The Debtors and their directors and officers share a common Executive and Private Company Liability Insurance Policy.”

Plaintiffs also alleged, “First, the Debtors will be exposed to a significant risk of res judicata, collateral estoppel, or evidentiary prejudice if the Lawsuits are allowed to continue.”

The plaintiffs also alleged, “The Debtors seek an order staying the prosecution of the Lawsuits until the effective date of a plan in these Chapter 11 Cases, pursuant to §§ 362(a)(1) or 362(a)(3) of the Bankruptcy Code. Continued prosecution of the Lawsuits will expose the Debtors to a risk of res judicata, collateral estoppel, or evidentiary prejudice.”

The plaintiffs then alleged, “If the Lawsuits are allowed to continue, the Debtors’ prospects for efficiently and effectively monetizing assets and/or confirming their plan will be impaired, thwarting the Congressional purpose of providing the Debtors with a breathing spell from litigation pressures during their efforts to confirm a plan.”

Additionally, the plaintiffs alleged, “If the Adversary Defendants are not enjoined from prosecuting the Lawsuits, the Debtors will likely suffer irreparable harm and their ongoing efforts will be threatened.”

Plaintiffs presented two claims for relief, including for alleged declaratory judgment and injunctive relief. 

In the prayer for relief, the plaintiffs requested a judgment for injunctive and declaratory relief. 

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