BlockFi Clients to Receive Full Settlement of Due Crypto Claims Within the Next 90 Days

Defunct digital asset lender BlockFi has announced that its US clients will receive 100% of their eligible claims in three months. According to the announcement, this move is part of the firm’s bankruptcy estate recovery efforts.

BlockFi is pleased to announce that, based on the BlockFi Estate’s recovery efforts, clients can now expect to receive 100% of your eligible claim from the BlockFi Estate.

— BlockFi (@BlockFi) July 25, 2024

More so, the BlockFi Estate will distribute 100% of all dollarized petition date value to the eligible customers. This development comes amid sales of BlockFi’s FTX claims, which started earlier this week.

BlockFi Sells FTX Claims to Settle Creditors

In early July, BlockFi’s bankruptcy administrator, BlockFi Estate, sold the bankrupt firm’s claims from the defunct exchange FTX. The claims were sold for more than their face value, giving the estate more funds for distribution.

Hence, BlockFi Estate notes that it will distribute all dollarized petition date values on the allowed client claims. 

While the claim settlement date remains unclear, BlockFi noted that it will occur soon. Moreover, the crypto lender notes that final claims distributions for US clients may proceed over the next 90 days.

While these recoveries cannot undo the impact of the platform pause, efficiently distributing 100% of claim value to clients in the near future will be an extraordinarily positive outcome.

— BlockFi (@BlockFi) July 25, 2024

The bankruptcy estate will ensure the final distributions proceed as quickly as possible while prioritizing the safety of customer assets.

Furthermore, eligible clients who want to receive crypto distributions must create a Coinbase account by August 23. On the other hand, those who submitted their claims but have no Coinbase account by the said date will receive their settlement in cash.

If you are interested in and eligible to receive distributions in crypto, please make sure to set up your Coinbase account by AUGUST  23, 2024. More information regarding BlockFi Client Asset Distributions through Coinbase is available on our blog: https://t.co/AGJcdrDfnJ

— BlockFi (@BlockFi) July 25, 2024

In addition, BlockFi noted that distributions for international clients may encounter delays due to Bermuda’s regulatory requirements. Based on Bermuda regulations, BlockFi must conduct additional know-your-customer (KYC) and identity verification before distributions commence.

The BlockFi Estate will fast-track the due diligence to ensure timely claims distributions. Also, the defunct crypto assets lender noted that it would contact international customers to provide the necessary identity information to ensure prompt distribution.

BlockFi started selling its FTX claims on June 24 and ended the sale on July 10. The lender received around $874.5 million in principal settlement against Alameda Research and FTX, of which secured claims amounting to $250 million.

BlockFi’s Bankruptcy Woes 

BlockFi’s woes began in mid-2022 following the sudden depeg and collapse of Terra’s algorithm stablecoin. The crypto lender’s financial troubles escalated after its main backer, FTX, encountered a liquidity crunch, leading to bankruptcy in November 2022. 

The main reason behind BlockFi’s downfall was its substantial exposure to FTX. The cascading effect of this liquidity crunch was BlockFi filing for Chapter 11 bankruptcy.

BlockFi has been trying to wind up in good faith while ensuring its clients recover their funds. 

The crypto lender recently settled its long-running complicated relationship with the FTX and Alameda Research Estates for nearly $1 billion. This brought BlockFi closer to recovering 100% of its customer funds.

Under the recent settlement, BlockFi received $874.5 million in claims against Alameda and FTX. According to the court filing, the FTX plan will treat $250 million as a secured claim, prioritizing the payment to BlockFi over other claims. 

Consequently, FTX will no longer hold any claim against BlockFi. The bankrupt digital asset lender will receive the remaining claims like other FTX claims. 

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