BlockFi, a bankrupt crypto lender, has announced a significant step in its journey towards repaying its clients. The first interim distribution of funds will be facilitated through Coinbase, starting this month. This interim distribution is set to begin in July and will be processed in batches in the coming months. Eligible clients will be notified of the repayment through the email linked to their BlockFi accounts. However, clients outside the US may face restrictions due to regulatory requirements that apply to them.
Partnership with Coinbase for Efficient Allocation
In May, BlockFi appointed Coinbase as its distribution partner to streamline the process of allocating funds to eligible clients with BlockFi Interest Accounts (BIA), Retail Loans, and Private accounts. Clients who were unable to open a Coinbase account at the time will receive cash as an alternative. Earlier this year, BlockFi returned over $500 million worth of crypto to nearly 130,000 clients, a move that marked the beginning of their repayment efforts after emerging from bankruptcy in October 2023.
BlockFi filed for Chapter 11 bankruptcy protection in November 2022 following the collapse of FTX, which had initially agreed to rescue the lender before facing its demise. The bankruptcy filing estimated over 100,000 creditors with assets and liabilities ranging from $1 billion to $10 billion. Despite the setbacks, BlockFi is actively pursuing claims against FTX and Alameda Research to enhance the repayment values for its clients. These claims are anticipated to amount to approximately $875 million.
Upon emerging from bankruptcy, BlockFi stated that clients with interest-bearing Earn accounts would receive between 39.4% and 100% of the value in their accounts. The repayment process through Coinbase marks a crucial milestone in BlockFi’s efforts to honor its commitments to clients who had entrusted their funds with the lending platform. As the distributions begin this month, clients can expect to see progress in the coming months as funds are allocated in batches.
Final Thoughts
The partnership with Coinbase, along with BlockFi’s commitment to prioritizing the repayment of its clients, signifies a positive step forward for the previously embattled crypto lender. With the proactive approach to resolving the bankruptcy situation and the strategic alliances forged to expedite the repayment process, BlockFi is poised to regain the trust and confidence of its clients as it navigates the road to financial recovery.
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