Bankrupt crypto lender BlockFi has recently announced a significant step in its effort to repay its clients. The first interim distribution of funds through Coinbase will begin this month. Eligible clients will receive repayment notifications through the email linked to their BlockFi accounts. However, clients outside the US are currently restricted from receiving funds due to regulatory requirements that apply to them.
The interim distribution process will commence in July and will be processed in batches in the coming months. Earlier this year, BlockFi refunded over $500 million worth of crypto from its Wallet Product to nearly 130,000 clients. The company tapped Coinbase as its distribution partner in May to efficiently allocate funds to eligible BlockFi Interest Account (BIA), Retail Loan, and Private clients. Clients who are unable to open a Coinbase account will receive cash.
BlockFi’s repayment efforts began after the firm emerged from bankruptcy in October 2023. At that time, clients with interest-bearing Earn accounts were promised to receive between 39.4% and 100% of the value in their accounts. The lender filed for Chapter 11 bankruptcy protection in November 2022 following the collapse of FTX, which had agreed to rescue BlockFi before its own demise. The bankruptcy filing estimated more than 100,000 creditors with assets and liabilities ranging from $1 billion to $10 billion.
BlockFi is still pursuing claims against FTX and Alameda Research in an effort to increase clients’ repayment values. These claims are expected to be worth around $875 million. The company is working towards efficiently distributing funds to eligible clients and is taking steps to ensure that clients are informed and updated throughout the process. The distribution process is expected to continue in the coming months until all eligible clients receive their repayments.
In conclusion, BlockFi is making significant progress in repaying its clients and fulfilling its obligations after emerging from bankruptcy in October 2023. The firm has partnered with Coinbase to handle distributions efficiently, and efforts are being made to ensure that eligible clients receive their funds in a timely manner. With ongoing claims against FTX and Alameda Research, BlockFi aims to increase clients’ repayment values. The company’s commitment to its clients’ repayment and transparency throughout the process demonstrates its dedication to making things right after a challenging period of bankruptcy.
