BlockFi emerges from bankruptcy; will pay loan and interest users in early 2024
BlockFi initially halted withdrawals and filed for bankruptcy in November 2022.
BlockFi announced on Oct. 24 that it has emerged from bankruptcy and can now enact the various parts of its bankruptcy plan, including a wind-down.
BlockFi said that it will continue to distribute client assets. It noted that wallet customers can currently request withdrawals and will be able to do so until the withdrawal window closes on Dec. 31. That withdrawal period originally opened in August.
The company added that it intends to allow BlockFi Interest Account (BIA) and Retail Loan customers to make withdrawals available through a separate process starting in early 2024. BlockFi said it will send updates on this part of the process in the coming months. BlockFi also noted that it anticipates multiple waves of distributions and said that the assets in this category will come from its wind-down process.
BlockFi added that it will continue its claims reconciliation process to ensure that claims are accurate and that clients receive a fair amount of funds.
Finally, BlockFi said that the enactment of its recovery plan allows it to recover assets that it says are owed by FTX, Three Arrow Capital (3AC), and other companies. BlockFi said that successful litigation could increase payouts for claimants. Some parties have contested BlockFi’s claims, and the merit of BlockFi’s case is unclear.
BlockFi filed for bankruptcy last November.
BlockFi initially halted withdrawals and filed for bankruptcy in Nov. 2022. At that time, the company cited issues around the FTX empire — which would later result in FTX’s bankruptcy — as its reason for halting its services.
BlockFi maintained an extensive lending relationship with FTX. BlockFi’s bankruptcy claim suggested that it owed $275 million to FTX. However, later developments indicated that BlockFi had $1.2 billion of assets and loans with FTX and Alameda. BlockFi CEO Zac Prince testified regarding the mutual lending arrangement in the criminal case of former FTX CEO Sam-Bankman on Oct. 14.
BlockFi’s bankruptcy filings otherwise indicate that it owes as much as $10 billion to at least 100,000 creditors and former customers.