- Cryptocurrency lending firm BlockFi announces emergence from bankruptcy.
- The company’s creditor-focused bankruptcy plan is now in effect.
- Users will regain access to BlockFi’s withdrawal services.
The cryptocurrency industry was sent into a frenzy by the collapse of FTX, causing a domino effect that reverberated through various crypto entities. Among these, cryptocurrency lending firm BlockFi bore the brunt of the chaos, teetering on the edge of disaster and eventually filing for Chapter 11 bankruptcy.
Following months of efforts and adjustments, BlockFi has made significant headway, signifying a potential return to financial stability.
The Re-Emergence of BlockFi
On Tuesday, October 24th, BlockFi announced its emergence from bankruptcy and the immediate effect of its bankruptcy plan, the “Plan.”
The Plan will initiate the repayment process of BlockFi’s creditors by pursuing payments from crypto exchange FTX and ill-fated hedge fund Three Arrows Capital (3AC) as part of the next phase of its post-bankruptcy strategy. With the resurgence, the crypto lending firm will resume distributing digital assets to clients and continue the claims reconciliation process.
BlockFi will ensure the accurate representation of client claims regarding asset class and amount that guarantees equitable distributions of recovered assets to clients.
BlockFi’s Plan For Creditor Payments And Asset Recovery
BlockFi emphasized the immediate accessibility of its withdrawal services to users, encouraging those who have yet to take this step to log in to the company website and initiate a withdrawal request.
The company will enter its wind-down phase, adhering to the roadmap in its plan to prepare BlockFi for the initial distribution of available assets. Over the next months, clients holding funds in BlockFi Interest Accounts (BIA) and Retail Loans will receive emails on how to withdraw funds by the approved recovery amounts.
The initial distributions are expected to commence in early 2024, and subsequent distributions will be contingent upon numerous factors, including asset recoveries from FTX and 3AC.
BlockFi Wallet users are encouraged to submit withdrawal requests before the Wallet withdrawal window closes on December 31, 2023, at 11:59 PM UTC, to safeguard against potential asset losses during the bankruptcy settlement process.
The BlockFi Bankruptcy and Lead-Up
On November 29th, BlockFi voluntarily filed for bankruptcy shortly after suspending transactions due to the infamous FTX collapse.
At the time of FTX’s downfall, BlockFi had assets invested in the exchange and had yet to receive the full amount of its revolving credit.
BlockFi’s Bermuda-based subsidiary also filed for bankruptcy, creating over 100,000 creditors, assets, and liabilities ranging between $1 billion and $10 billion.
On the Flipside
- While BlockFi’s emergence from bankruptcy is undoubtedly a positive development for the company and its creditors, it’s important to note that this doesn’t guarantee the total settlement of all claims.
- The now-defunct exchange FTX still owes $1.2 million to BlockFi.
- The former FTX CEO is in a legal battle with the United States Department of Justice(DOJ).
Why This Matters
BlockFi’s resurgence from bankruptcy represents a beacon of hope for its extensive list of creditors, offering the possibility of asset recovery. It has the potential to reignite investor confidence in the cryptocurrency industry, demonstrating its resilience and ability to weather challenging storms.
Find out more about BlockFi’s restructuring plan after multiple attempts and setbacks:
BlockFi Restructuring Plan Slammed by US Court
Cryptocurrency investors are making strategic sales amid the Bitcoin surge; find out more:
Ark Invest Offloads COIN and GBTC Shares Amid Bitcoin Rally