BlockFi Set to Return Bitcoin and Ethereum to Customers—Here’s How It Will Work
Introduction
BlockFi, a crypto lending firm, went bankrupt last year. Now, it is planning to return Bitcoin and Ethereum to its customers. The company will use Coinbase, the largest crypto exchange in America, to do this. This article explains how the process will work and what BlockFi customers need to know.
The BlockFi Collapse
BlockFi was a major crypto lender offering high-yield crypto accounts. However, it collapsed last year after the FTX fallout in 2022. BlockFi had over $1.2 billion tied up in FTX and its trading arm, Alameda Research. When FTX collapsed, BlockFi followed, filing for Chapter 11 bankruptcy in November 2022.
How Will BlockFi Repay Customers?
BlockFi will start paying back its former customers this month. The repayments will be made in cryptocurrency, specifically Bitcoin and Ethereum. To receive these payments, customers need to have a Coinbase account.
Using Coinbase for Repayments
Coinbase will handle the distribution of crypto assets. The exchange says it will attempt to distribute the funds on a weekly to monthly basis. This process will continue as long as the repayment program is active. However, there are some important details to keep in mind:
- Coinbase Account Requirement## : Customers must have an eligible Coinbase account. The information on the Coinbase account must match the BlockFi credentials. Customers cannot use someone else’s Coinbase account to get their funds.
- Email Notifications## : Customers will first get an email from BlockFi. Then, they will receive a notification from Coinbase about the deposit.
- ## Non-U.S. Customers## : Coinbase will not make distributions to non-U.S. customers. BlockFi is working with the Joint Liquidators of BlockFi International to find a repayment plan for these creditors.
Separate Claims for Cash Repayments
Some former BlockFi customers want to get their cash back instead of crypto. These claims will be handled separately by a financial advisory firm named Kroll and their payment processing partner, Digital Disbursements.
Best Possible Outcome for Customers
The administrator of the BlockFi wind-down said this week that the repayment plan is the best possible outcome for customers. The sale of BlockFi’s claims against FTX recovered enough funds to start repaying customers. These claims were sold at a substantial premium to their face value, which helped in gathering the necessary funds.
Impact of the FTX Fallout
The collapse of FTX had a massive impact on many crypto companies, including BlockFi. FTX was a huge player in the crypto world, and its sudden collapse caused a ripple effect. BlockFi, which had significant assets tied up in FTX, was severely affected. This led to a pause in withdrawals and eventually, the bankruptcy filing.
Steps to Recover Funds from BlockFi Collapse
If you are a former BlockFi customer, here are the steps you need to follow to recover your funds:
- Create a Coinbase Account## : If you don’t already have one, you need to create an account on Coinbase. Make sure the information matches your BlockFi account.
- Wait for Email Notification## : BlockFi will send you an email when they are ready to distribute your funds.
- Receive Coinbase Notification## : After the email from BlockFi, you will get a notification from Coinbase about the deposit.
- Check Your Coinbase Account## : Once you receive the notification, check your Coinbase account to confirm the deposit.
- ## Non-U.S. Customers## : If you are a non-U.S. customer, stay tuned for updates from BlockFi and the Joint Liquidators of BlockFi International.
High-Yield Crypto Accounts and Risks
BlockFi offered high-yield crypto accounts, which attracted many customers. However, these accounts also came with high risks. The collapse of FTX showed how vulnerable these investments can be. Many customers lost access to their funds when BlockFi paused withdrawals and eventually went bankrupt.
BlockFi Bankruptcy and Chapter 11 Filing
When BlockFi filed for Chapter 11 bankruptcy in November 2022, it was a significant blow to the crypto community. Chapter 11 allows companies to reorganize and attempt to pay back their creditors over time. For BlockFi customers, this meant a long wait to see if they would get their funds back.
The Role of Financial Advisory Firm Kroll
Kroll, a financial advisory firm, is playing a key role in handling cash repayments for BlockFi customers. They are working with Digital Disbursements to process these claims. Customers who want their funds back in cash will need to follow the instructions provided by Kroll.
Crypto Asset Distribution Schedule
Coinbase will distribute the crypto assets on a weekly to monthly basis. This schedule depends on the instructions from BlockFi and the eligibility of the customers’ Coinbase accounts. It is important for customers to regularly check their email and Coinbase account for updates.
BlockFi and FTX Fallout Impact on Creditors
The FTX fallout had a significant impact on BlockFi creditors. Many creditors were left wondering if they would ever see their funds again. The repayment plan through Coinbase is a step towards resolving these issues, but it highlights the risks associated with investing in crypto.
Handling BlockFi Claims with Financial Advisory Kroll
If you are handling your BlockFi claims through Kroll, make sure to follow their instructions carefully. Kroll is working to ensure that cash repayments are processed efficiently. Keep an eye on any communication from Kroll and Digital Disbursements for updates on your claim.
What Happened to BlockFi Customers’ Crypto Assets?
When BlockFi paused withdrawals and filed for bankruptcy, many customers were left in the dark about the status of their crypto assets. The company had significant investments in FTX, and the collapse of FTX severely impacted BlockFi’s ability to operate. The current repayment plan aims to return these crypto assets to their rightful owners.
Steps to Recover Funds from BlockFi Collapse
Recovering funds from the BlockFi collapse involves several steps. First, customers need to ensure they have an eligible Coinbase account. Then, they need to wait for email notifications from BlockFi and Coinbase. Finally, they should check their Coinbase account to confirm the deposit.
BlockFi International Repayment Plan for Non-U.S. Customers
Non-U.S. customers of BlockFi are in a unique situation. Coinbase will not make distributions to them, but BlockFi is working with the Joint Liquidators of BlockFi International to find a solution. These customers should stay informed about any updates regarding the repayment plan.
Conclusion
BlockFi’s plan to return Bitcoin and Ethereum to its customers is a complex process involving multiple steps and coordination with Coinbase. Customers need to have an eligible Coinbase account and wait for notifications from both BlockFi and Coinbase. Non-U.S. customers will need to follow updates from BlockFi International for their repayment plan. Despite the challenges, this plan represents the best possible outcome for customers affected by the BlockFi collapse and the FTX fallout.
