NEW YORK, March 6 (Reuters) - Bankrupt crypto companies

FTX and BlockFi have resolved their disputes stemming from the

companies' collapses in 2022, with FTX agreeing to pay BlockFi

up to $874 million, according to court documents filed on

Wednesday.

The settlement is subject to approval by U.S. Bankruptcy

Judge John Dorsey in Wilmington, Delaware.

The two companies had sued each other in 2023, seeking to

recover money they had loaned each other before they both went

bankrupt in November 2022. Under the new settlement, FTX agreed

to prioritize a $250 million payment to BlockFi, and the

remainder of the settlement is contingent on its efforts to

repay its own customers in bankruptcy.

The two companies had a close relationship before a 2022

market crash revealed FTX's widespread misuse of customer funds.

BlockFi provided loans to FTX's affiliated hedge fund Alameda

Research, and it turned to FTX for rescue financing during a

volatile cryptocurrency market in summer 2022.

FTX could pay BlockFi up to $689 million on account of the

Alamexa loans, but only the first $250 million is guaranteed.

The remainder is contingent on FTX's ability to first repay its

own customers and other creditors, according to court documents

filed in Delaware and New Jersey bankruptcy courts.

FTX also agreed to pay BlockFi an additional $185.3 million,

to account for the amount that BlockFi held in its FTX trading

accounts when the cryptocurrency exchange collapsed in 2022.

FTX expects to fully repay its own customers, but that

result is not guaranteed, an FTX attorney said in January.

BlockFi had previously agreed to repay FTX up to $275

million from the 2022 rescue loan, but only if it can first

repay its own customers in full.

BlockFi has said it is unlikely to fully repay customers who

had interest-bearing BlockFi accounts. The company previously

estimated that those customers might receive between 39.4% and

100% of the value in their accounts.

As part of the agreement, BlockFi agreed to drop its lawsuit

over 56 million in Robinhood shares that were allegedly

pledged as collateral for BlockFi's loans to Alameda. Those

equity shares were later seized by the U.S. Department of

Justice when FTX founder Sam Bankman-Fried was arrested.

Bankman-Fried was convicted in November 2023 of stealing $8

billion from FTX customers. He is set to be sentenced on March

28, and is expected to appeal his conviction.