Bankrupt crypto lender BlockFi will begin repayments this month

Bankrupt crypto lender BlockFi announced a major step in its effort to repay its customers. In an X post on Wednesday, the lender noted that the first tentative distribution of funds to customers through Coinbase will begin this month.

According to BlockFi, the provisional distribution will start in July and will be processed in batches in the coming months. The company added that eligible customers will receive refund notifications via the email linked to their BlockFi accounts.

Non-US customers restricted

BlockFi mentioned that customers outside the US cannot receive funds now due to regulatory requirements that apply to them.

The lender selected Coinbase as a distribution partner in May to efficiently allocate funds to BlockFi Interest Accounts (BIA), retail loans and private customers. The company noted that customers unable to open a Coinbase account at that time will receive cash.

Earlier this year, BlockFi refunded more than $500 million in crypto from its Wallet product to nearly 130,000 customers.

Exit from bankruptcy

BlockFi’s repayment efforts began after the company emerged from bankruptcy in October 2023. At the time, BlockFi stated that customers with interest-bearing Earn accounts would receive between 39.4% and 100 % of the value of your accounts.

BlockFi filed for Chapter 11 bankruptcy protection in November 2022 after the implosion of FTX, which had agreed to bail out the lender before its own demise. In its November 2022 bankruptcy filing, the company estimated more than 100,000 creditors with assets and liabilities ranging from $1 billion to $10 billion.

The lender is still pursuing claims against FTX and Alameda Research to help boost customer repayment values. These claims are estimated to be worth about $875 million.

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