BlockFi, the beleaguered cryptocurrency lender, has received court approval to repay 100% of customers’ funds and unsecured creditors after nearly two years of financial turmoil and legal battles.
The US Bankruptcy Court for the District of New Jersey granted this approval, marking a significant milestone in BlockFi’s journey to make its customers whole.
BlockFi Granted Full Repayment Approval
BlockFi has finally won court approval to fully repay its customers and unsecured creditors, closing a prolonged chapter of uncertainty.
The court’s decision on Thursday allows the company to return 100% of customers’ assets, a development that follows BlockFi’s filing to monetize $874.5 million in claims against FTX.
On July 25, 2024, BlockFi announced it had sold its claims against FTX to a third-party claims purchaser. This transaction, part of a broader settlement, included secured, unsecured, and customer claims executed at a premium over their face value.
This approval sets the stage for BlockFi customers to receive their funds fully.
The company shared on X to acknowledge the pain its customers endured due to the suspension of deposits and withdrawals in 2022.
BlockFi expressed that while the asset recovery cannot undo the past financial crisis, efficiently distributing 100% of claim value to clients is 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 company assured users that its Plan Administrator and Joint Liquidators are collaborating with relevant authorities to ensure a smooth distribution process for international customers.
This court approval represents a change in BlockFi’s distribution plan. Earlier this month, the company announced an interim distribution of crypto assets to eligible customers in July.
The assets will be distributed through Coinbase, and BlockFi has urged users to open a Coinbase account by August 23 to qualify for digital asset distributions. Those without a Coinbase account will receive their assets in cash.
Finalized Settlement and Liquidation Plans
BlockFi has reached a significant settlement regarding its financial complications following the collapse of FTX.
The collapse of FTX in November 2022 had severe repercussions for BlockFi, a major cryptocurrency lending platform, which led to BlockFi filing for bankruptcy.
The subsequent legal and financial entanglements between BlockFi and FTX were extensive and intricate.
Ken Aulet, attorney representing the Plan Administrator, clarified the settlement in a statement with Cryptonews, explaining that the claims had been settled in March and sold at a premium. BlockFi customers are set to receive 100% of the dollar value of their claims.
However, the appreciation of BTC and ETH since the filing date means customers receiving in-kind distributions will receive less cryptocurrency than initially deposited.
Distributions are expected to begin shortly after August 23, 2024, following BlockFi’s earlier $874.5 million settlement with the FTX and Alameda Research estates in March 2023.
Notably, BlockFi is also undergoing liquidation. It will cease future operations and temporarily maintain its legacy systems to support the liquidation and distribution processes.
In May 2024, BlockFi shut down its web platform and announced plans to begin temporary crypto distributions via Coinbase in July, with Kroll managing fiat claims.
However, non-U.S. clients may face additional verification requirements.