BlockFi founder Zac Prince, now a managing director at GalaxyOne, has launched a new crypto lending program aimed at attracting assets, offering interest-only loans, waived origination fees, and other promotional incentives. The rollout comes as members of a BlockFi class action, who secured a court-ordered payout in their lawsuit against Prince, are still waiting to actually receive any money from that $13.25 million settlement.

Prince was a defendant in the litigation, which settled allegations that he violated US securities laws by selling BlockFi Interest Accounts without adequate disclosures. The same product had already drawn a parallel enforcement action against the company itself: in February 2022, BlockFi agreed to pay $100 million in penalties to the SEC and 32 states over the interest accounts, months before it filed for bankruptcy. A judge ordered the insurance companies backing Prince and his executive team at BlockFi to pay $13.25 million for this class of BlockFi customers. A court approved the deal in December 2025, with BlockFi's insurers funding the pool and Prince and the other defendants legally waiving any admission of wrongdoing.

A new crypto portfolio line of credit

Prince's new product, a so-called “crypto portfolio line of credit” from GalaxyOne, allows anyone who decides to trust it to entrust as many digital assets as they desire with his new employer. Clients can borrow against BTC, ETH, and SOL. GalaxyOne is the platform Galaxy assembled after completing its long-planned acquisition of custodian BitGo in 2025, consolidating trading, custody, and asset management as crypto-backed lending gradually rebuilds following the 2022 collapse of the sector's major lenders. Although Galaxy claims there is no origination fee and no rehypothecation, borrowers still face the risk of liquidation of their collateral if prices fall — guardrails the company presents as its differentiators.

Describing the company's newest crypto promotion, Prince said, “We're excited to bring a competitive crypto-backed borrowing product to market,” emphasizing its “competitive” fees. Galaxy, eager to amass as much capital as possible, is extending customers fee waivers and interest-only payment options so that depositors can maximize their financial leverage.

BlockFi's collapse and the pending payout

From 2018 to 2022, BlockFi amassed digital assets in its own way, paying up to 9.5% APY to incentivize inbound deposits — yields that proved unsustainable. The company went bankrupt in November 2022, filing for Chapter 11 weeks after the collapse of FTX, to which BlockFi had significant exposure through a credit facility from FTX US and assets held on the exchange — a failure that came alongside those of fellow crypto lenders Celsius and Voyager. In addition to the high-APY interest accounts, Prince also ran BlockFi's crypto-backed loan programs. Both terminated four years ago.

According to the still-in-progress BlockFi, Inc. Securities Litigation, the $13.25 million payout remains pending, with a claims administrator “moving forward the next steps in preparation for distribution.” That insurer-funded pool is separate from the BlockFi bankruptcy estate, which has been returning a portion of customers' assets through staged creditor distributions since 2024.

Prince, meanwhile, is still making personal income from launching variants of crypto loan products. Galaxy's 2026 proxy filing does not disclose Prince's compensation, yet he has apparently returned to profiting from crypto lending before this class of BlockFi victims has received its distributions.

Galaxy's history with BlockFi and Terra (LUNA)

Galaxy also has a history with another collapsed crypto project, Terra (LUNA), in addition to its history with BlockFi. With regard to Do Kwon's collapsed high-yield scheme, New York's attorney general secured an agreement requiring $200 million in disgorgement after finding that Galaxy promoted Kwon's LUNA while selling the now-worthless token. Galaxy neither admitted nor denied the findings in that settlement.

The attorney general wrote, “Galaxy helped a little-known token increase its market price from $0.31 in October 2020 to $119.18 in April 2022, while profiting in the hundreds of millions of dollars.”

LUNA is currently trading below $0.00005. Galaxy must pay New York that disgorgement amount in four installments through 2028.

Source: Protos