Navigating the crypto winter has been tough, and for BlockFi customers, the chill just got a little less biting – at least for some in California. If you’re a BlockFi borrower in the Golden State, you might be in line for a refund! Let’s dive into the details of how bankrupt crypto lender BlockFi is set to return over $100,000 to its California-based customers.
Why is BlockFi Refunding California Customers?
Here’s the situation: After BlockFi halted trading on November 10th last year due to the broader crypto market turmoil and FTX collapse fallout, some borrowers in California continued making loan repayments. Unbeknownst to them, they could have paused these payments. This is where the California Department of Financial Protection and Innovation (DFPI) stepped in.
The DFPI, California’s financial watchdog, launched an investigation and discovered that:
- At least 111 BlockFi borrowers in California kept repaying their loans even after the trading halt.
- These repayments occurred between November 11th and November 22nd.
- The total amount repaid during this period was approximately $103,471.
The core issue? According to the DFPI, BlockFi didn’t promptly inform these borrowers that they could stop making repayments. The regulator stated BlockFi failed to “provide timely notification to borrowers that they could stop repaying their BlockFi loans.”
When Were Borrowers Finally Notified?
It wasn’t until November 22nd that BlockFi finally notified borrowers they could halt loan repayments “until further notice.” This delay meant that for nearly two weeks after the trading halt, California customers unknowingly continued to pay on their loans.
BlockFi’s Response and the Path to Refunds
To rectify this situation, BlockFi took action. On February 24, 2023, they filed a motion with the bankruptcy court seeking permission to return these payments to the affected borrowers. This is a crucial step because BlockFi is currently navigating bankruptcy proceedings.
Here’s a breakdown of the key dates and actions:
| Date | Event |
|---|---|
| November 10, 2022 | BlockFi halts trading platform. |
| November 11 – 22, 2022 | California borrowers continue loan repayments. |
| November 22, 2022 | BlockFi notifies borrowers to stop repayments. |
| February 24, 2023 | BlockFi files motion for refund approval with bankruptcy court. |
| April 19, 2023 | Hearing scheduled for bankruptcy court motion approval. |
What Happens Next? The Waiting Game
The refunds aren’t automatic just yet. The motion needs to be approved by the bankruptcy court. A hearing is scheduled for April 19th to decide on this motion. If approved, BlockFi has agreed to promptly direct its loan servicer to return the payments. This includes not just the principal payments but also any interest and late fees incurred during this period.
According to DFPI documents, BlockFi is committed to refunding “all funds paid following the November 10th platform pause” if the motion is granted.
License Suspension and Continued Relief for California Borrowers
Adding another layer to this, BlockFi has agreed to an “interim suspension” of its California Financing Law (CFL) license. This suspension will remain in effect while the bankruptcy and license revocation actions are ongoing. What does this mean for California borrowers?
- Repayment Pause Continues: BlockFi will continue to instruct its agents to pause loan repayment collections from California customers.
- No New Fees: They will not charge any new interest or late fees on these loans, unless the bankruptcy court rules otherwise.
- Credit Score Protection: BlockFi has also committed to not reporting California residents’ loans as delinquent or defaulted to credit agencies for the period starting November 11, 2022. Furthermore, they will refrain from any actions that could negatively impact California residents’ credit scores related to these loans.
Background: DFPI’s Actions Against BlockFi
The DFPI’s actions against BlockFi predate this refund agreement. Commissioner Clothilde V. Hewlett had previously taken the following steps:
- 30-Day Suspension: Suspended BlockFi’s lending license for 30 days starting November 11, 2022.
- License Revocation: Initiated action to revoke BlockFi’s CFL license on December 15, 2022.
In Summary: A Small Win for California BlockFi Borrowers
While the larger BlockFi bankruptcy situation is still unfolding, this agreement to refund California customers is a positive step. It highlights the role of regulatory bodies like the DFPI in protecting consumers, even in the complex world of crypto lending. For affected California borrowers, keep an eye on the bankruptcy court’s decision on April 19th – it could mean a welcome, albeit perhaps unexpected, refund is on its way.
Disclaimer: The information provided is not trading advice, Bitcoinworld.co.in holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.