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Crypto Lender BlockFi Emerges from Bankruptcy, Begins Repaying

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BlockFi, a cryptocurrency lending company, has successfully emerged from a turbulent period triggered by the FTX exchange’s downfall in 2022. The company officially declared this milestone on Tuesday, marking a crucial juncture that allows it to commence the repayment process to its creditors.

In a blog post, BlockFi conveyed its appreciation to its leadership, advisors, and various stakeholders for their unwavering commitment over the past 11 months to achieving this significant achievement. They proudly declared that BlockFi reached its Effective Date more expeditiously and effectively than numerous other companies operating in the retail cryptocurrency space.

BlockFi had diligently been crafting its bankruptcy strategy over several months. With its official resurgence, the company is now set to initiate the prearranged phase of winding down its operations. Within this framework, BlockFi has set its sights on reclaiming assets from entities like FTX and Three Arrows Capital. 

Significantly, the company is dedicated to redistributing digital assets to its clients, and it has already granted access to withdrawals virtually for all of its Wallet customers.

Customers who held interest-bearing accounts with BlockFi can expect to receive emails in the near future, encouraging them to withdraw their available funds in the upcoming months. This is expected to mark the first phase of asset distribution, with additional distributions planned thereafter. 

The precise amounts of these subsequent distributions will be subject to a range of factors, with particular emphasis on how BlockFi is addressed within the FTX bankruptcy proceedings.

BlockFi’s experience with bankruptcy commenced in the middle of 2022 when it encountered liquidity problems attributed to the collapse of Terra’s stablecoin. During this critical period, FTX came to BlockFi’s aid by offering a substantial $400 Million credit line. 

Nevertheless, the tables turned, as FTX also grappled with bankruptcy issues in November. This, in turn, had a domino effect, culminating in financial instability for BlockFi.

A significant turning point occurred on August 17 when a United States court greenlit the strategy to phase out BlockFi’s operations and settle its outstanding debts. This judicial ruling played a pivotal role in enabling BlockFi to commence the process of reimbursing its U.S.-based Wallet customers. 

It’s worth noting that at that time, U.S. customers were not granted the privilege to withdraw their assets. In a recent update, BlockFi has officially announced that international users are now granted the ability to make withdrawals from their BlockFi Wallets.

The emergence from bankruptcy is a significant step for BlockFi, as it paves the way for the company to fulfill its commitments to creditors, investors, and clients. The crypto lending firm’s journey through the challenges of the past year underscores the resilience and adaptability of the digital asset industry, as it continues to navigate through the complexities of an evolving financial landscape.

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