Bankrupt Crypto Lender BlockFi Initiates First Round of Customers Reimbursement

• BlockFi to start interim crypto reimbursement to customers via Coinbase in July 2024.
• Non-US clients are currently ineligible for distributions due to regulatory constraints.
• Future distributions will be managed through Coinbase.

Bankrupt cryptocurrency lender BlockFi is set to begin returning funds to its customers this month, utilizing Coinbase as the distribution platform.

This long-awaited development comes after BlockFi’s operations were suspended in May following the collapse of FTX, leading to a bankruptcy filing and a subsequent partnership with Coinbase to facilitate the return of customer assets.

BlockFi Web Platform Shut Down and Coinbase Distribution Partnership

With the funds request window now closed, BlockFi is collaborating with Coinbase to manage the next steps. The exchange stated:

“As described in our previously announced Coinbase distribution partnership blog post, BlockFi will commence first interim crypto distributions through Coinbase in July 2024,”

According to BlockFi, the funds will be disbursed in batches over the coming months. Eligible customers will receive notification via the email address associated with their BlockFi account, including detailed instructions on how to create a Coinbase account. 

BlockFi is pleased to announce Coinbase as our distribution partner to ensure continuity of crypto withdrawals available to our eligible BlockFi Interest Account (BIA), Retail Loan, and Private clients.

— BlockFi (@BlockFi) May 9, 2024

However, non-U.S. clients are currently unable to receive funds due to regulatory constraints.

The former crypto lender added that customers who missed the April 28 deadline or May 10 identity verification date can still access their funds through an approved Coinbase account. Clients unable to open a Coinbase account will receive cash distributions.

Furthermore, future distributions, including those based on funds recovered from FTX, will also be managed through Coinbase. Without this partnership, the Plan Administrator would only distribute cash in future rounds.

Meanwhile, BlockFi warns clients to beware of scams from third-party actors pretending to offer crypto distributions. The company emphasizes that it will not partner with any other providers for these distributions.

In November 2022, BlockFi declared bankruptcy following FTX’s collapse. The following year, the company announced its closure and outlined plans to return customers’ crypto holdings, setting a withdrawal request deadline of April 28, 2024. 

On May 9, BlockFi informed clients that because the deadline had passed, they would receive instructions on setting up a Coinbase account for asset withdrawals.