BlockFi Initiates Repayments to 100,000 Creditors Starting This Month

BlockFi Initiates Interim Crypto Distributions to Creditors

BlockFi Initiates Interim Crypto Distributions to Creditors – BlockFi, the bankrupt crypto lender, has announced the commencement of interim crypto distributions to creditors through Coinbase starting this month, as stated in a recent Twitter and blog post.

BlockFi Begins Staggered Distributions; Non-US Clients Face Regulatory Barriers

The distributions will be executed in batches over the coming months, with eligible clients notified via their registered BlockFi account email addresses. Notably, non-US clients are currently unable to receive funds due to regulatory constraints specific to their jurisdictions.

This development marks a pivotal step in BlockFi’s recovery journey since filing for Chapter 11 bankruptcy protection in November 2022 amidst the collapse of crypto exchange FTX.

Founded in 2017 by Zac Prince and Flori Marquez, BlockFi gained prominence by offering high-yield interest accounts and crypto-backed loans. The company raised substantial capital, including a $350 million Series D funding round in March 2021, valuing it at $3 billion. However, regulatory challenges emerged in July 2021, prompting cease-and-desist orders from multiple U.S. states regarding BlockFi’s interest accounts, which were deemed unregistered securities. In February 2022, BlockFi settled with the SEC for $100 million concerning its lending practices.

FTX Collapse Forces BlockFi Into Bankruptcy with Over $1.2 Billion in Frozen Assets

The decisive blow came with the collapse of FTX in November 2022, where BlockFi had significant exposure through its ties with FTX and Alameda Research, resulting in over $1.2 billion in assets becoming illiquid. Facing liquidity challenges, BlockFi filed for Chapter 11 bankruptcy, listing more than 100,000 creditors.

During the restructuring process, BlockFi attributed its financial woes largely to FTX and Alameda Research. The lender’s proposed restructuring plan, which received overwhelming approval from creditors, paved the way for planned repayments.

BlockFi’s Post-Bankruptcy Revival and Partnership with Coinbase

BlockFi emerged from bankruptcy in October 2023, nearly a year after filing. As part of its post-bankruptcy strategy, BlockFi has partnered with Coinbase to facilitate the distribution of funds to creditors. Withdrawals have commenced for wallet customers, with distributions for BlockFi Interest Account (BIA) and loan customers expected to follow.

According to BlockFi’s latest updates, BIA holders are anticipated to recover between 39.4% to 100% of their funds, contingent on the outcomes of the FTX bankruptcy proceedings and BlockFi’s equity valuation in Robinhood.

As of July 2024, creditors are awaiting the interim distributions promised by BlockFi. While wallet customers have initiated withdrawals, BIA and loan customers have yet to receive repayments, with the exact timeline and amounts subject to the complexities of ongoing legal proceedings related to FTX’s bankruptcy.

FAQs about BlockFi’s Interim Crypto Distributions to Creditors

For more up-to-date crypto news, you can follow Crypto Data Space.