If you lost money through BlockFi Interest Accounts, you may have legal options to pursue recovery. The collapse of BlockFi in November 2022 left hundreds of thousands of investors facing significant losses, but affected account holders still have pathways to seek compensation through securities claims, class action participation, and individual legal action.
Key Takeaways
- BlockFi’s November 2022 bankruptcy affected over 572,000 investors who held BlockFi Interest Accounts
- The SEC found that BlockFi Interest Accounts were unregistered securities and that the company made material misstatements about risks
- A $13.25 million class action settlement received final court approval in December 2025
- Individual claims may be available beyond the class action, depending on your specific circumstances
- Time limits apply to investment fraud claims, making prompt legal consultation essential
What Happened to BlockFi
BlockFi, founded in 2017 by Zac Prince and Flori Marquez, operated as a cryptocurrency lending platform that promised investors yields as high as 9.5% APR through its BlockFi Interest Accounts. The company grew rapidly, appearing on Inc.’s list of fastest-growing companies in America in 2021.
However, BlockFi’s business model carried substantial risks that were not adequately disclosed to investors. The company loaned customer deposits to institutional borrowers, including Alameda Research, the hedge fund affiliated with the now-collapsed FTX exchange. When FTX imploded in November 2022, BlockFi’s exposure to both FTX and Alameda Research left the company unable to meet its obligations to customers.
BlockFi filed for Chapter 11 bankruptcy on November 28, 2022, disclosing more than 100,000 creditors. At the time of filing, the company had approximately $1.2 billion in assets tied to FTX and Alameda Research, including $355 million frozen on the FTX platform and $671 million in outstanding loans to Alameda.
March 2026 Update: The $13.25M class action has preliminary approval. A final approval hearing occurred in December 2025. The official settlement site (blockfisecuritiessettlement.com) has not yet been updated to reflect any final ruling or distributions — check status there and at the Kroll links below for bankruptcy recoveries.
SEC Enforcement and Securities Violations
In February 2022, months before the bankruptcy, the Securities and Exchange Commission reached a landmark $100 million settlement with BlockFi in what the agency called a “first-of-its-kind enforcement action” against a crypto lending platform. The settlement was divided equally between the SEC ($50 million) and 32 state securities regulators ($50 million).
The SEC charged BlockFi with three primary violations:
Selling Unregistered Securities
The SEC determined that BlockFi Interest Accounts qualified as securities under both the Howey test (investment contracts) and the Reves test (notes). BlockFi sold these securities without proper registration, violating Section 5 of the Securities Act of 1933.
Investment Company Act Violations
BlockFi failed to register as an investment company under the Investment Company Act of 1940, despite meeting the definition of an investment company based on how it pooled and deployed investor assets.
Material Misstatements About Risk
Perhaps most damaging to investors, the SEC found that BlockFi made materially false statements about the safety of customer deposits. Specifically, BlockFi told investors that its institutional loans were “typically” over-collateralized, implying that customer funds were protected by collateral exceeding the loan amounts.
The SEC investigation revealed a different reality:
| Year | Percentage of Loans Over-Collateralized |
|---|---|
| 2019 | Approximately 24% |
| 2020 | Approximately 16% |
| 2021 (through June) | Approximately 17% |
This discrepancy between BlockFi’s marketing claims and actual lending practices forms the foundation for securities fraud claims by affected investors.
The FTX and Alameda Research Connection
BlockFi’s relationship with FTX and Alameda Research ultimately precipitated its collapse. Understanding this connection is essential for investors pursuing claims, as it demonstrates both the company’s risk management failures and the basis for fraud allegations.
In July 2022, FTX finalized a deal giving it the option to purchase BlockFi for approximately $240 million, along with a $400 million credit facility. At the time, FTX was viewed as a “white knight” rescuing BlockFi from earlier financial difficulties caused by the crypto market downturn and the failures of Three Arrows Capital and Voyager Digital.
Did You Know: Court filings reveal that BlockFi’s risk management team warned CEO Zac Prince about the dangers of FTT-collateralized loans to Alameda Research. These warnings were allegedly dismissed, and BlockFi continued lending nearly $900 million to Alameda between July and September 2022, almost exclusively collateralized by FTT tokens.
When FTX collapsed in November 2022, the value of FTT tokens plummeted, rendering the collateral backing BlockFi’s loans to Alameda essentially worthless. Sam Bankman-Fried, the founder of FTX, was convicted in November 2023 of defrauding customers of FTX and lenders of Alameda Research.
BlockFi’s CEO testified that he believed the company would not have filed for bankruptcy if the Alameda loans had remained in good standing, directly linking the company’s failure to the fraudulent conduct at FTX and Alameda.
Legal Claims Available to BlockFi Investors
Investors who lost money through BlockFi may have multiple legal theories available for pursuing recovery, similar to other types of investment fraud claims. The specific claims applicable to your situation depend on factors including when you invested, how much you lost, and whether you were a U.S. resident.
Securities Fraud
Claims under Section 10(b) of the Securities Exchange Act and Rule 10b-5 for material misstatements and omissions about the risks of BlockFi Interest Accounts.
Unregistered Securities
Claims under Section 12(a)(1) of the Securities Act for the sale of unregistered securities, which may provide for rescission of the investment.
State Securities Laws
Most states have securities laws that provide additional remedies for investors harmed by fraud or the sale of unregistered securities.
Additional Legal Theories
Beyond securities claims, BlockFi investors may also pursue:
- Breach of Fiduciary Duty: Management’s decision to ignore risk warnings and continue lending to Alameda despite red flags may constitute a breach of duties owed to investors
- Negligent Misrepresentation: False statements about the safety of deposits and the nature of lending practices may support claims for negligence
- Fraudulent Transfer: Certain transactions made by BlockFi prior to bankruptcy may be subject to clawback
The BlockFi Class Action Settlement
A class action lawsuit against BlockFi’s founders and executives resulted in a $13.25 million settlement in 2025. The settlement addresses securities fraud claims against Zac Prince, Flori Marquez, and other directors and officers of BlockFi.
| Settlement Detail | Information |
|---|---|
| Settlement Amount | $13,250,000 (plus accrued interest) |
| Class Period | January 1, 2019 – November 28, 2022 |
| Eligible Claimants | BIA holders during class period |
| Affected Investors | Approximately 89,000 |
Class Action Participation
If you held a BlockFi Interest Account during the class period, you may automatically be included in the settlement class. No action is required to participate in the settlement distribution. However, you should be aware of several important considerations:
- The opt-out deadline was November 20, 2025 for those who wished to pursue individual claims
- Participating in the class settlement releases your claims against the settling defendants
- Pro-rata share of the Net Settlement Fund (exact amount depends on total claims filed and will be distributed automatically)
- Individual claims may provide greater recovery for investors with substantial losses
If you timely opted out by November 20, 2025 and had a FINRA-registered broker recommend BlockFi, you may have a separate claim. Most class members are now bound by the settlement.
Beyond the Class Action: Individual Claims
While the class action settlement provides some recovery for affected investors, the relatively small amount relative to total losses means that many investors should evaluate whether pursuing individual claims makes sense for their situation.
Gary Varnavides Advantage: Attorney Gary Varnavides spent 10 years at Sichenzia Ross Ference LLP defending broker-dealers and financial institutions. This insider experience provides unique insight into how cryptocurrency platforms and their executives structure their defenses, enabling more effective advocacy for defrauded investors.
Individual claims may be appropriate when:
- Your losses significantly exceed the average class member recovery
- You have evidence of specific misrepresentations made to you
- A broker or financial advisor recommended the BlockFi investment
- You are a high-net-worth investor with substantial account losses
- You opted out of the class action settlement
BlockFi Bankruptcy Recovery (Primary Source for Most Investors)
BlockFi’s Chapter 11 bankruptcy has delivered the main recovery through ongoing Kroll distributions. Many Interest Account holders have already received or will receive substantial portions of their claims. The approved class action provides an additional pro-rata payment.
Check your status: restructuring.ra.kroll.com/blockfi and cases.ra.kroll.com/BlockFiDistributions.
Statute of Limitations for BlockFi Claims
Time limits apply to investment fraud claims, making it essential to consult with an attorney promptly if you believe you have a claim. The applicable limitations period depends on the type of claim and where you reside.
Federal Securities Claims
Claims under Section 10(b) and Rule 10b-5 must be filed within 2 years of discovering the fraud, and no more than 5 years after the fraudulent conduct occurred.
FINRA Arbitration
If a FINRA-registered broker or advisor recommended the investment, arbitration claims must generally be filed within 6 years of the event giving rise to the claim.
State securities laws have varying limitations periods, typically ranging from 2 to 6 years. California, for example, requires claims to be filed within 3 years. The discovery rule may extend these deadlines in cases where the fraud was concealed from investors.
FINRA Arbitration for Broker-Recommended Investments
Many investors learned about BlockFi through recommendations from their stockbrokers, financial advisors, or investment advisors. If a FINRA-registered representative recommended that you invest in BlockFi products, you may have a separate claim against that individual and their employing firm.
FINRA arbitration claims commonly involve:
- Unsuitable Recommendations: Recommending volatile cryptocurrency investments to conservative investors, retirees, or those with limited risk tolerance
- Failure to Supervise: Brokerage firms failing to monitor advisors who promoted unregistered or unsuitable crypto products
- Misrepresentation of Risks: Advisors who downplayed the risks of crypto lending platforms or presented them as safe alternatives to traditional investments
- Unauthorized Trading: Making crypto investments without proper client authorization
FINRA arbitration provides certain advantages over court litigation, including generally faster resolution and lower costs. However, arbitration awards are binding and subject to limited appeal rights.
How to Evaluate Your BlockFi Claim
Determining whether you have a viable claim and the best avenue for pursuing recovery requires careful analysis of your specific circumstances. Consider the following factors:
Document Your Losses
- Account statements showing deposits and balances
- Communications from BlockFi about your accounts
- Marketing materials you received
- Records of any representations made to you
Identify Responsible Parties
- BlockFi and its executives
- Any broker or advisor who recommended the investment
- Third parties who may have facilitated the investment
- Potential insurance coverage
Why Choose Varnavides Law for Your BlockFi Claim
Pursuing claims against cryptocurrency platforms and their executives requires an attorney who understands both securities law and the unique challenges of crypto-related litigation. Gary Varnavides brings a distinctive perspective to these cases.
Before founding Varnavides Law, Gary spent 10 years at Sichenzia Ross Ference LLP defending broker-dealers and financial institutions against investor claims. This experience provides invaluable insight into how defendants think, what arguments they deploy, and how to overcome their defenses. Gary now uses this knowledge to advocate for investors who have been harmed by misconduct.
Varnavides Law is licensed to practice in California and New York, three of the most important jurisdictions for cryptocurrency and securities litigation. The firm has been recognized by Super Lawyers as a Rising Star from 2015 through 2023, placing Gary among the top 2.5% of attorneys in the New York Metro area.
Frequently Asked Questions
Am I automatically part of the BlockFi class action settlement?
If you held a BlockFi Interest Account between January 1, 2019 and November 28, 2022, you are likely included in the settlement class automatically. You do not need to take any action to participate in the settlement distribution. However, participating in the class action releases your claims against the settling defendants, which may limit your ability to pursue additional recovery through individual claims.
How much can I expect to recover from the BlockFi settlement?
The $13.25 million class action settlement will be distributed pro-rata among eligible claimants. The exact amount depends on the total valid claims filed and your account value at bankruptcy. Funds will be sent automatically once processing is complete.
Can I pursue individual claims in addition to the class action?
If you opted out of the class action settlement before the November 20, 2025 deadline, you may pursue individual claims. If you did not opt out, your claims against the settling defendants are released. However, you may still have claims against other parties, such as brokers or advisors who recommended the investment, that are not covered by the class action settlement.
What if my broker recommended I invest in BlockFi?
If a FINRA-registered broker or financial advisor recommended that you invest in BlockFi products, you may have a separate claim against that individual and their employing brokerage firm. These claims can be pursued through FINRA arbitration and are distinct from the class action against BlockFi’s executives. Common theories include unsuitable recommendations, failure to supervise, and misrepresentation of risks.
Is it too late to file a claim for my BlockFi losses?
For most investors, recoveries are already underway automatically via the bankruptcy (Kroll) and class action distributions. Individual claims are only available if you timely opted out and had a FINRA-registered broker recommend the investment. Contact an attorney only in that specific situation.
What documents should I gather for my BlockFi claim?
Important documents include: BlockFi account statements showing deposits and balances; any communications you received from BlockFi about your accounts; marketing materials that influenced your decision to invest; records of conversations with brokers or advisors who recommended the investment; and any proof of how the investment was represented to you. Even if you no longer have access to your BlockFi account, an attorney can often help obtain relevant records.
How long does it take to resolve a BlockFi investment claim?
Timeline varies based on the type of claim pursued. FINRA arbitration cases typically resolve within 12 to 18 months. Court litigation can take longer, often 2 to 3 years or more. The class action settlement received final approval in December 2025. Distributions are now being processed and will be sent automatically to eligible class members once complete.
What fees do you charge for BlockFi investment claims?
We handle most investment fraud cases on a contingency fee basis. This means you pay no upfront attorney fees, and we only receive payment if we successfully recover money for you. The specific fee percentage will be discussed during your free consultation. You remain responsible for case costs such as filing fees, expert witnesses, and deposition transcripts, though we can discuss cost arrangements during your consultation.
Take Action on Your BlockFi Investment Claim
If you lost money through the BlockFi Interest Accounts, time-sensitive deadlines may affect your ability to pursue recovery. Contact Varnavides Law today to discuss your losses and learn what legal options may be available. We offer free initial consultations and handle most cases on a contingency fee basis.
Prior results do not guarantee a similar outcome. This page is for informational purposes only and does not constitute legal advice. No attorney-client relationship is created by viewing this information.
