BlockFi, a crypto lender that recently emerged from bankruptcy, has announced a significant step towards repaying its clients. The firm declared that the first interim distribution of funds to clients will be facilitated through Coinbase starting this month. The distribution will be carried out in batches over the next few months, beginning in July. Eligible clients will be notified about the repayment through the email linked to their BlockFi accounts. However, it’s important to note that clients residing outside the US will not be able to receive funds currently due to regulatory restrictions.
Partnership with Coinbase
In an attempt to efficiently allocate funds to eligible clients holding BlockFi Interest Accounts (BIA), Retail Loans, and Private accounts, BlockFi partnered with Coinbase in May. Clients who were unable to open a Coinbase account at that time will receive their repayment in cash. This strategic move by BlockFi comes after the company refunded over $500 million worth of crypto to nearly 130,000 clients earlier this year.
BlockFi’s journey towards repayment began after the company emerged from bankruptcy in October 2023. As part of the repayment plan, clients with interest-bearing Earn accounts are expected to receive between 39.4% and 100% of the value in their accounts. The bankruptcy filing in November 2022 revealed that BlockFi had over 100,000 creditors with assets and liabilities ranging from $1 billion to $10 billion. The collapse of FTX, the company that had initially agreed to rescue BlockFi before facing its demise, led to BlockFi filing for Chapter 11 bankruptcy protection.
Despite the challenges faced during bankruptcy, BlockFi is currently pursuing claims against FTX and Alameda Research in hopes of enhancing the repayment values for its clients. These claims, estimated to be worth approximately $875 million, aim to provide additional compensation to the creditors and investors affected by the bankruptcy proceedings.
BlockFi’s efforts to repay its clients reflect a significant milestone in the company’s journey towards financial stability and trust restoration within the crypto lending industry. By leveraging strategic partnerships and pursuing additional claims, BlockFi aims to uphold its commitment to providing fair and equitable reimbursements to its clients.