By George Ward
Michael Kaplan, the judge of New Jersey’s bankruptcy court, has greenlighted BlockFi’s request to pay its workers over $10 million as a part of a retention initiative.
BlockFi To Pay Bonus Over Three Months
The filing released on January 27 revealed that BlockFi would pay its workers $9.98 million. This payment, which will be in three installments, will take place over 12 months.
The payment was split into two tiers, with the first tier paying workers 42.5% of their base pay and the second tier paying them 9% of their base pay. However, the court filing did not specify the number of workers eligible for the bonus.
Also, it did not provide any requirement or qualification for each tier. According to reports, BlockFi has a total of about 130 employees.
In a previous appeal, the bankrupt crypto lender stated that the bonus was necessary to keep its staff during the bankruptcy proceedings. The company fears losing most or all of its staff if it does not pay them.
Megan Crowell, the Chief People Officer of BlockFi, argued that numerous opportunities exist within and outside the crypto sector. Crowell believed BlockFi’s workers might try these opportunities if they were not paid.
However, unsecured creditors of BlockFi argued that the amount for the bonus was too large. Similarly, other bankrupt crypto companies such as Voyager and Celsius have submitted requests to pay their workers.
Both companies argued that the payment would help them retain the valuable and scarce skills their employees offered.
BlockFi Has $1.2 billion Exposure To Alameda Research And FTX
According to recent financial documents, the defunct crypto lender, BlockFi, had a significant financial exposure (about $1.2 billion) to Alameda Research and FTX. BlockFi’s filing showed a loan of $831.3 million to Alameda Research and assets worth over $415.9 million.
In addition, the filing showed that BlockFi had over 662,427 customers, with 70% having balances below $1,000. Furthermore, a recent report from Bloomberg stated that the lender plans to sell $160 million worth of loans backed by 68,000 crypto-mining machines.
The fall of Bitcoin’s price in 2022 affected the company’s operations alongside other crypto miners. Last year, crypto miners battled with poor electricity supply and increased tariffs.
Additionally, the lender had claimed ownership of Sam Bankman-Fried’s shares with Robinhood. BlockFi argued that Alameda Research collected a loan from the firm and pledged the stocks as collateral. However, the US authorities seized the shares a few days ago.