As a long-term crypto investor with several years of experience, I’ve seen my fair share of market volatility and platform instability. The recent news about BlockFi’s bankruptcy filing and subsequent interim crypto distributions through Coinbase has left me feeling both hopeful and skeptical.
BlockFi, a crypto lending platform that filed for bankruptcy in May, has revealed customers who failed to withdraw their funds prior to the platform’s closure will receive repayments this month. These distributions will be facilitated through BlockFi’s collaboration with cryptocurrency exchange Coinbase.
BlockFi Announces First Interim Crypto Distributions
In May, BlockFi made an announcement: its web platform was set to close by the end of the month. Simultaneously, they disclosed a new collaboration with cryptocurrency exchange Coinbase for processing client fund withdrawals. As a result of this partnership, eligible users who had missed the April 28 withdrawal deadline would be able to retrieve their digital assets through Coinbase.
Beginning this month, July 2023, Coinbase has been announced as the distribution partner for the initial interim crypto payouts from the lending platform, which will start being disbursed. This was made known on X, according to the announcement. Eligible customers will receive their repayments via this partner.
Those who met the conditions of being eligible cryptocurrency users who hadn’t received their initial distribution before BlockFi halted operations, and qualifying customers in line for extra crypto distributions were identified. However, non-US account holders will experience a delay in receiving their funds due to regulatory restrictions that BlockFi must adhere to.
The Plan Administrator has been diligently collaborating with the Joint Liquidators of BlockFi International to establish a distribution procedure for non-US clients, in accordance with Bermuda’s regulatory requirements.
In the upcoming months, the crypto lending platform announced that distribution processes will be carried out in groups. Consequently, clients will be informed via email sent to their registered BlockFi account addresses.
As a crypto investor, I learned that those who failed to finish the identity verification by May 10 would still be able to withdraw their assets, but only through Coinbase if they have or create an approved account with them. If an investor chooses not to get approved by Coinbase, they will instead receive their distribution in cash.
Eligible Users Receive Coinbase Notification
On Thursdays, some BlockFi users encountered notifications from Coinbase, according to reports in the crypto lending community’s subreddit. These users revealed they had received emails stating that their personal details aligned with BlockFi’s records, as verified by Coinbase.
Some clients were thrilled and declared the repayment plan an encouraging development. However, a few customers raised concerns about the current distribution status.
As a crypto investor, I can relate to the frustration of waiting for promised deposits. One Reddit user echoed my feelings, saying “I’ll believe it’s not just empty promises from BF/Kroll when I see the funds in my Coinbase account.” Another user shared their patience level, mentioning that they “anticipate receiving a deposit around December 13, 2028.”
During the initial inflow of emails, the crypto lending platform cautioned users about potential phishing scams. They emphasized that all official communications with clients take place through authorized email channels, social media, their claims agent (Kroll), or Kroll’s claims distribution partner. Additionally, they reminded users that any communication originating from Coinbase should be verified before responding or providing sensitive information.
As a researcher investigating recent developments in the cryptocurrency industry, I came across the filing for Chapter 11 bankruptcy protection made by BlockFi on November 22, 2022, in the US District of New Jersey. The cause of their financial distress can be attributed to the collapse of key industry players like Three Arrows Capital (3AC) and FTX, which significantly impacted BlockFi’s operations.
During that period, the company disclosed holding approximately $257 million in cash reserves, while there were over 100,000 creditors owed hundreds of millions of dollars in unsecured debts. Notably, the US Securities and Exchange Commission figured among these creditors with an unsecured claim amounting to $30 million.
This year, I observed that BlockFi reached an agreement with both FTX and its trading arm, Alameda Research, to resolve disputes valued at approximately $1 billion. Consequently, FTX acknowledged the entirety of the debt owed.
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2024-07-19 14:12