In re BLOCKFI INC., et al. v. George J. Gerro
- Summarized by Stephen Falanga , Walsh Pizzi O'Reilly Falanga LLP
- 5 months 1 week ago
- Case Type:
- Business
- Case Status:
- Affirmed
- Citation:
- 24-2637 (3rd Circuit, Sep 09,2025) Not Published
- Tag(s):
-
- Ruling:
- In this non-precedential ruling the Third Circuit affirmed the judgment of the District Court affirming the decision of the Bankruptcy Court disallowing Appellant's Proof of Claim seeking actual Bitcoin or the value of the Bitcoin at the time BlockFi filed for bankruptcy. The Third Circuit rejected the basis for the claim that the Debtor had violated the California Financial Code by possessing and using Appellant's Bitcoin that was provided as collateral for a loan finding that BlockFi was a finance lender under the Statute because it was engaged in the business of making consumer loans.
- Procedural context:
- The Bankruptcy Court disallowed a proof of claim filed by appellant, Gerro and he appealed to the District Court which affirmed the judgment of the Bankruptcy Court. Upon appeal to the Third Circuit, the Third Circuit affirmed the judgment of the District Court and dismissed Gerro’s appeal
- Facts:
- In 2019, Gerro borrowed $2.275 million from BlockFi. The loan was secured by Bitcoin then worth $4.55 million. When the price of Bitcoin fell in March 2020, BlockFi liquidated Gerro’s collateral pursuant to its rights under the loan agreement. BlockFi suggested that it could repurchase the Bitcoin it had sold if Gerro posted more collateral to secure the loan or if he paid down some of the outstanding principal. Gerro replied about one month later, purporting to accept BlockFi’s offer to reinstate his loan. But BlockFi refused to do so on the terms proposed by Gerro because the price of Bitcoin had rebounded and repurchasing Gerro’s collateral in the open market would have caused
BlockFi a loss of around $1 million. BlockFi filed for bankruptcy under Chapter 11 in 2022, prompting Gerro to file a
proof of claim against the debtor’s estate. He argued that BlockFi violated California law by possessing and using his collateral, asserting a claim for 426 Bitcoin or the value thereof at the time BlockFi filed for bankruptcy. The Bankruptcy Court disallowed theclaim and Gerro appealed to the District Court. After the District Court dismissed Gerro’s
appeal, he filed this appeal.
- Judge(s):
- HARDIMAN, KRAUSE, and CHUNG, Circuit Judges
ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!
