Bankrupt crypto lender BlockFi has announced that it will start its first interim crypto distributions through Coinbase this month. The move comes as part of a previously announced partnership with Coinbase, which aims to facilitate these distributions systematically and efficiently.
In an X post, BlockFi detailed its plans for the distributions, stating that the distributions will begin in this month of July and that they will be processed in batches over the coming months.
Notifying eligible clients
According to the announcement, eligible clients will be notified via the email associated with their BlockFi account. The company emphasized the importance of ensuring that clients’ email addresses are up-to-date to avoid any delays in receiving notifications about their distributions.
The announcement also highlighted a significant restriction for non-US clients. Due to regulatory requirements, these clients cannot receive funds at this time. While revealing its plans to shut down its web platform in May, BlockFi partnered with Coinbase to allow clients to access and withdraw funds.
Following FTX's collapse in November 2022, BlockFi entered bankruptcy proceedings. In 2023, BlockFi announced its shutdown and laid out a plan to refund customers' digital currency holdings, with a cutoff date of April 28, 2024, for clients to request withdrawals.
In the past, BlockFi has experienced instances of fraudulent activity, where some individuals received fake emails that appeared to be legitimate, deceiving them into believing their remaining balances would be immediately withdrawn.
Approval of repayment plan
In September 2023, the bankruptcy court approved BlockFi’s Chapter 11 repayment plan, which aims to settle debts with approximately 10,000 creditors.
According to estimates, BlockFi's total liabilities range from $10 billion to over 100,000 creditors, including a substantial $1 billion owed to its three largest creditors and a significant $220 million to the now-bankrupt crypto hedge fund Three Arrows Capital.
In March 2024, BlockFi reached a tentative agreement with the estates of FTX and Alameda Research, worth $875 million. This settlement resolved BlockFi's claims against FTX, which totaled around $1 billion, and also resulted in FTX dropping "millions of dollars in avoidance claims and counterclaims" against BlockFi.
During Sam Bankman-Fried’s criminal trial, BlockFi’s CEO Zac Prince took the stand as a government witness and pointed to the FTX founder’s actions as the primary reason for BlockFi's bankruptcy.