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BlockFi Inc. executives paid an investor $15 million to stop a potential lawsuit over the company's plummeting stock value in the summer of 2022, the company's counsel said on Monday in bankruptcy court.

At a bankruptcy court hearing in Trenton, New Jersey, BlockFi attorney Joshua Sussberg said that the settlement satisfied allegations by the investor, known only as "Counterparty A," who had bought equity shares that were offered as part of executive pay packages.

The shares were offered for sale at a discount to the company's $6 billion to $8 billion January 2022 valuation, but their value fell during the summer as the fall of two cryptocurrencies wrecked havoc on the crypto markets.

According to Sussberg, the BlockFi investor threatened legal action, claiming that BlockFi and its officials ought to have disclosed the potential for bitcoin market contagion more clearly.

BlockFi saw the investor's accusations as "specious," but the parties came to a private agreement on August 23 under which BlockFi executives paid the investor $15 million back, according to Sussberg.

Zac Prince, the creator of BlockFi, made the greatest amount under that settlement, paying back $6.144 million.

An emergency loan given by cryptocurrency exchange FTX on July 1 made BlockFi's sharp decrease in value clear. With that financing, FTX was given the option to purchase BlockFi for $240 million, thereby establishing a cap on the value of the company's shares.

20% of BlockFi's workforce were let go when the company's worth fell. In order to prevent surviving employees from leaving during its bankruptcy and to reward workers who had previously received company ownership as part of their salary, Sussberg indicated that BlockFi would shortly ask the court for permission to implement an employee incentive program.

Prince missed out on a $600,000 incentive payout due to the FTX purchase price, Sussberg said, and his stock holding lost $412.82 million in value. BlockFi's forthcoming staff retention strategy excludes Prince and other leaders.

Jersey-based New As a direct result of FTX's failure weeks earlier, BlockFi filed for bankruptcy protection on November 28. Sam Bankman-Fried, the creator of FTX, has now been detained on fraud-related allegations, although he has pled not guilty.

As security for an outstanding obligation owing to them through FTX subsidiary Alameda Research, BlockFi claimed $465 million worth of shares of online broker Robinhood Markets Inc. BlockFi and FTX are at odds over this claim. A BlockFi attorney said on Monday that the DOJ was in the process of taking assets owned by two or three BlockFi clients situated in Washington state. The US Department of Justice's seizure of the shares added to the complexity of the case.

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