Bankrupt lender BlockFi has enlisted Coinbase to disburse funds to customers

What’s new? The bankrupt crypto lending company BlockFi has announced the closure of its web platform this month and engaged the US crypto exchange Coinbase as a partner to distribute assets to users. Thus, after BlockFi’s closure, eligible customers will be able to withdraw funds through Coinbase.

Press release

What else is known? The company clarified that customers who missed the April 28 withdrawal deadline and the May 10 verification deadline through the BlockFi platform can still access their assets by creating or using a verified Coinbase account. In this case, compensation is not converted to cash and can be received in the form of cryptocurrencies.

However, suppose a client is eligible to withdraw cryptocurrency but misses the deadline and does not have a verified Coinbase account. In that case, their assets will be converted to cash and distributed according to the plan.

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BlockFi offered interest-bearing deposit accounts by lending those user deposits to other customers. In July 2022, rival platform Celisus froze its customers’ assets, prompting BlockFi users to withdraw deposits en masse to save money.

In November of the same year, the situation was exacerbated by the collapse of the FTX exchange due to a multi-billion dollar fraud by its top management. An FTX-affiliated fund failed to repay a large loan to BlockFi, and the exchange itself froze the assets of the lending platform.

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After that, BlockFi itself froze customer funds and later filed for bankruptcy. In September 2023, the court approved BlockFi’s plan to repay 10 000 creditors. According to court documents, income account holders will be able to receive between 39,4 and 100% of their funds.

In March this year, BlockFi reached an agreement in principle with FTX, under which the latter will pay $874,5 million.

Earlier this month, Sunil Kavuri, a representative of the largest FTX creditor group, called for a vote against the new compensation plan presented by the exchange’s managers. It calls for a payout of up to 118% of the claim amount, but in cash and at cryptocurrency exchange rates at the time of the bankruptcy. At the time, BTC was trading below $20 000.