Jai Sahu
The plan administrator will persist in utilizing Coinbase for future distribution phases, potentially including funds recouped from FTX.
The bankrupt cryptocurrency lender BlockFi is finalizing its operations shutdown, with plans to discontinue its web platform in May. BlockFi has formed a partnership with Coinbase to facilitate client fund access and withdrawals.
In a recent blog post, BlockFi announced that through its partnership with Coinbase, “eligible BlockFi Interest Accounts (BIA), Retail Loans, and Private Clients” will be able to withdraw their funds.
BlockFi filed for bankruptcy in November 2022 following the collapse of FTX and announced its eventual shutdown in 2023, detailing strategies for returning customer crypto assets. The deadline for submitting withdrawal requests was set for April 28, 2024.
On Thursday, May 9, BlockFi notified its clients that the deadline for withdrawing digital assets from the ongoing estate distribution had expired. They will now receive guidance on creating a Coinbase account to proceed with withdrawals, whether they are setting up a new account or using an existing one.
For those who missed the initial withdrawal deadline and the subsequent deadline of May 10, BlockFi is offering an additional chance for verification via its platform. Clients who fail to establish a verified Coinbase account risk having their assets converted to cash for distribution.
The plan administrator intends to continue leveraging Coinbase for the distribution of upcoming rounds, which may include funds recovered from FTX.
BlockFi has confirmed that it will not collaborate with any platforms other than Coinbase for the distribution of cryptocurrencies, urging investors to remain vigilant against potential scams from third-party entities.
Previously, BlockFi encountered issues with fraudulent activities, including deceptive emails that mimicked official communications, falsely promising immediate fund withdrawals.
In March, BlockFi reached an in-principle settlement of $875 million with the estates of FTX and Alameda Research. This settlement addressed BlockFi’s claims against FTX, which amounted to roughly $1 billion, and included FTX’s renouncement of “millions of dollars of avoidance claims and other counterclaims” against BlockFi.
BlockFi’s CEO, Zac Prince, who testified as a government witness in Sam Bankman-Fried’s criminal trial, stated that the actions of the FTX founder were directly responsible for BlockFi’s insolvency.
In September 2023, the bankruptcy court approved BlockFi’s Chapter 11 plan, which is aimed at repaying its 10,000 creditors. Current estimates indicate that BlockFi owes up to $10 billion to more than 100,000 creditors, including $1 billion to its three largest creditors and $220 million to the defunct crypto hedge fund Three Arrows Capital.