BlockFi Wins Court Approval to Return 100% of Customers’ Funds

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As a long-term crypto investor who has witnessed the ups and downs of this volatile market, I can’t help but feel a mix of relief and disappointment upon hearing about BlockFi’s latest development. Relief because finally, after what feels like an eternity, customers, including myself, are going to get our funds back in full. Disappointment, however, because of the long wait we have endured, the suspension of deposits and withdrawals on the platform, and the uncertainty that came with it.

After a long wait of nearly two years, BlockFi, the embattled crypto lending firm, has obtained approval from the United States Bankruptcy Court for the District of New Jersey to fully reimburse its customers and unsecured creditors using the company’s assets in the estate.

On Monday, the insolvent crypto lender requested the court’s permission to sell $874.5 million worth of claims against FTX for significantly more than their original value. Following consideration of the case, the court granted approval, resulting in customers receiving a complete refund of their assets.

BlockFi Offers Apology to Customers

On social media platform X, BlockFi expressed empathy towards their customers’ disappointment over the issues that caused the halt of deposit and withdrawal services in 2022.

Although the firm’s asset recovery can’t reverse the effects of its financial crisis, swiftly delivering 100% of the claim value to its clients in the short term is a highly commendable result.

Though these recoveries can’t reverse the effects of the platform halt, swiftly dispensing the full claim worth to clients soon would bring about a highly advantageous situation.

— BlockFi (@BlockFi) July 25, 2024

Based on my extensive experience in the financial industry and having closely followed the developments at this troubled crypto lender, I believe that the company is making a commendable effort to address the concerns of its customers. The announcement that they plan to initiate the final distribution of assets to their US clients within the next 90 days is a positive sign of progress. However, I also understand the frustration and concern felt by international clients who will have to wait longer due to regulatory hurdles. Having navigated similar complex regulatory environments in my career, I can appreciate the challenges they face and the importance of adhering to these regulations. While it may be a difficult and uncertain time for all involved, I remain hopeful that the company will find a solution that benefits all stakeholders in due course.

Customers residing outside the United States will be notified at an appropriate time by BlockFi to submit further verification for safeguarding their assets, adhering to regulatory standards in Bermuda.

The insolvent crypto lending company reassured its global users that their Plan Administrator and Joint Liquidators were collaborating with the proper regulatory bodies to facilitate the efficient dispersal of assets.

Change in Distribution Plan

This recent update signifies a notable shift in BlockFi’s distribution strategy. Previously, they announced the first interim distribution of crypto assets to eligible clients in July. However, the specific date for the payout remains undisclosed, meaning customers will have to endure a longer wait for their funds. Nevertheless, the positive aspect is that this time around, their complete holdings will be returned to them.

“BlockFi announced that users will receive their assets via Coinbase, its partner and major US cryptocurrency exchange, for the distribution process.”

If you’re a user of the struggling crypto lending platform and want your digital asset funds by August 23, create a Coinbase account to be eligible. Those without a Coinbase account will receive their remaining assets in cash instead.

Background and Legal Battle

Before meeting its unfortunate end in 2022 due to the downfall of crypto titan FTX, the company held a leading position within the industry. However, it was revealed that at the time, the firm had significant investments in Alameda Research, FTX’s affiliated organization.

In 2023, both companies found themselves embroiled in a legal dispute over the recovery of funds. However, the tables turned in May when BlockFi emerged victorious. FTX ultimately agreed to refund around $875 million to BlockFi.

Following the sale’s conclusion on July 10, BlockFi initiated a court filing on July 22 to distribute 100% of customers’ original deposited funds back to them. This action came shortly after the completion of BlockFi’s FTX claims sale on June 24.

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2024-07-26 12:40