Bankrupt crypto lender BlockFi has announced that it will commence its first interim crypto distributions through Coinbase this July. This initiative is part of a previously established partnership with Coinbase, aimed at facilitating these distributions systematically and efficiently.

Distribution Plans and Notifications

In a post on X, BlockFi outlined its distribution plans, stating that the process will begin this month and will be conducted in batches over the coming months. Eligible clients will be notified via the email associated with their BlockFi account. The company emphasized the importance of keeping email addresses up-to-date to avoid delays in receiving notifications.

Restrictions for Non-US Clients

BlockFi highlighted a significant restriction for non-US clients: due to regulatory requirements, these clients cannot receive funds at this time. In May, BlockFi announced plans to shut down its web platform and partnered with Coinbase to allow clients to access and withdraw funds.

Background and Bankruptcy Proceedings

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. BlockFi has experienced instances of fraudulent activity in the past, where fake emails deceived clients into believing their balances would be immediately withdrawn.

Approval of Repayment Plan

In September 2023, the bankruptcy court approved BlockFi’s Chapter 11 repayment plan, aiming to settle debts with approximately 10,000 creditors. BlockFi’s total liabilities are estimated to range from $10 billion to over 100,000 creditors, including $1 billion owed to its three largest creditors and $220 million to the now-bankrupt crypto hedge fund Three Arrows Capital.

Settlement with FTX and Alameda Research

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 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 testified as a government witness, pointing to the FTX founder’s actions as the primary reason for BlockFi’s bankruptcy.

Source: Cointelegraph