BlockFi to Distribute Crypto Assets via Coinbase in Effort to Refund Customers

BlockFi clients are advised to take note that all client communications will be conducted solely through official email channels. The bankrupt crypto lender BlockFi has confirmed that it will initiate its first interim crypto distributions through Coinbase starting this month. The partnership with Coinbase aims to facilitate these distributions in a systematic and efficient manner. The distributions will commence in July and will be processed in batches over the following months. Eligible clients will be informed through the email associated with their BlockFi account, emphasizing the importance of ensuring updated email addresses to prevent any delays in receiving distribution notifications; however, non-US clients are unable to receive funds due to regulatory requirements at this time.

In the aftermath of FTX’s collapse in November 2022, BlockFi entered bankruptcy proceedings and subsequently announced its shutdown in 2023. The company unveiled a plan to refund customers’ digital currency holdings, with a withdrawal request deadline of April 28, 2024. BlockFi faced challenges with instances of fraudulent activities where individuals received fake emails posing as legitimate correspondences, leading them to believe their remaining balances would be immediately withdrawn. The bankruptcy court approved BlockFi’s Chapter 11 repayment plan in September 2023 to settle debts with approximately 10,000 creditors. The total liabilities of BlockFi range from $10 billion to over 100,000 creditors, with substantial amounts owed to various entities including a significant debt to the now-bankrupt crypto hedge fund Three Arrows Capital.

In a subsequent development, BlockFi reached a tentative settlement agreement in March 2024 with the estates of FTX and Alameda Research, amounting to $875 million. This agreement resolved claims against FTX and dropped avoidance claims and counterclaims amounting to millions of dollars. During Sam Bankman-Fried’s criminal trial, BlockFi’s CEO Zac Prince pointed to FTX founder’s actions as the primary reason for BlockFi’s bankruptcy. The latest announcement regarding crypto distributions via Coinbase brings transparency and a structured approach to the ongoing processes for BlockFi clients to recoup their digital assets.