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The bankrupt crypto lender assured users that its Plan Administrator and Joint Liquidators are working with the relevant authorities to ensure the smooth distribution of assets for international customers.
Beleaguered crypto lender BlockFi has finally won court approval to make customers and unsecured creditors whole after almost two years of waiting. The company’s bankruptcy estate received the green light from the US Bankruptcy Court for the District of New Jersey on Thursday to repay 100% of customers’ funds.
On Monday, the bankrupt crypto lender filed with the court, seeking approval to monetize $874.5 million in claims against FTX at a substantial premium to their face value. After reviewing the case, the court granted approval, and customers can now expect a full refund of their assets.
BlockFi Offers Apology to Customers
Sharing the news on the social media platform X, BlockFi acknowledged customers’ hurt over its inefficiencies, which led to the suspension of deposits and withdrawals on the platform in 2022.
The firm said that while the asset recovery cannot undo the impacts of its financial crisis, efficiently “distributing 100% of claim value to clients in the near future will be an extraordinarily positive outcome”.
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 troubled crypto lender stated it may start the final distribution of assets to its customers in the United States within 90 days, while international clients will have a longer wait time due to regulatory hurdles.
BlockFi explained that customers outside the US will be informed in due time to provide additional proof to secure their assets in compliance with regulatory requirements in Bermuda.
The bankrupt crypto lender assured users that its Plan Administrator and Joint Liquidators are working with the relevant authorities to ensure the smooth distribution of assets for international customers.
Change in Distribution Plan
This latest development marks a significant change in the distribution plan. Earlier this month, BlockFi announced that it would start the first interim distribution of the crypto assets to eligible customers in July. Although the firm did not reveal the actual date for the distribution, users will now have to wait for a longer period for the recovery. However, the good thing is, this time, their funds will be returned in full.
BlockFi said the assets will be distributed to users through Coinbase. The firm has teamed up with the leading American exchange to conduct the asset distribution to users.
The troubled crypto lender has urged users who wish to receive their funds in digital assets to open a Coinbase account before August 23 to qualify. The remaining assets will be returned in cash to customers who do not have an account with the exchange.
Background and Legal Battle
The company was one of the top players in the industry before its unfortunate demise in 2022 following the collapse of FTX, another crypto giant. At the time, the firm disclosed massive exposure to FTX’s sister company Alameda Research.
Both companies went into a legal battle in 2023 to recover the funds. In May, BlockFi finally succeeded, with FTX agreeing to return approximately $875 million to the firm.
Shortly after, BlockFi started the sale of its FTX claims on June 24, which concluded earlier this month on July 10. The completion of the sale led to the firm filing with the court to return 100% of customers’ funds on July 22.
