Coinspeaker
Crypto Lender BlockFi to Begin Repayments on Coinbase Soon
Beleaguered cryptocurrency lender BlockFi announced that it plans to commence repayments to users who lost access to their assets when the company filed for bankruptcy in 2022 due to massive exposure to FTX.
In a recent announcement, the company said it will start the reimbursement this month through the American crypto exchange Coinbase. Those who already have an active Coinbase account will receive their funds in digital assets such as Bitcoin (BTC), Ethereum (ETH), and the popular USDT stablecoin, while others will receive their payments in cash.
Repayments Limited to US BlockFi Customers
BlockFi stated that only customers in the United States will be able to reclaim their funds due to regulatory hurdles. Additionally, qualified users will be informed through the same email registered with the company.
The repayments will be processed in batches over the next few months, with the first tranche scheduled for payout this month at an undisclosed date.
The distributions will be processed in batches in the coming months, and eligible clients will receive a notification to the BlockFi account email on file. Please note that non-US Clients are unable to receive funds at this time due to the regulatory requirements applicable to…
— BlockFi (@BlockFi) July 17, 2024
BlockFi had earlier estimated in a court filing last year that customers with interest-bearing Earn accounts would receive between 39.4% and 100% of the value in their accounts during repayments.
The planned repayment comes a few months after BlockFi resolved its financial disputes with bankrupt crypto company FTX. According to court documents, the defunct exchange agreed to pay BlockFi up to $874 million, with an initial $250 million prioritized. The remainder is contingent on FTX’s efforts to repay its own customers.
Pre-Collapse Business Relationship
Before the market crash in 2022, BlockFi and FTX had a strong business relationship. However, things fell apart when the exchange suddenly collapsed in November and was unable to repay the loans it obtained from BlockFi through its sister firm, Alameda Research, a crypto hedge fund owned by former FTX CEO Sam Bankman-Fried (SBF).
This caused a rift between the two companies, with both suing each other in 2023 to recover loans provided to one another prior to the market collapse. The dispute persisted until March 2024, when FTX finally agreed to repay the loan.
In addition to FTX, BlockFi still has money stuck in other companies such as Three Arrows Capital (3AC), a once-prominent crypto hedge fund that suffered a massive liquidity crisis in 2022.
BlockFi said last year that its approved bankruptcy plan allows it to pursue repayments from the fallen hedge fund, which was operated by Kyle Davies and Su Zhu.
Meanwhile, BlockFi exited bankruptcy in 2023 and has begun a post-bankruptcy wind-down. The defunct crypto lender closed down its web platform in May 2024.
