The former CeFi lending platform BlockFi, now in a state of bankruptcy, has just announced that it will start refunds to its creditors in the month of July.
Recently, it had entered into an agreement with Coinbase, which will provide support for the distribution of crypto assets through its own platform.
Now BlockFi is ready to close definitively an unpleasant chapter of its existence in the crypto landscape.
All the details below.
The BlockFi crisis after the collapse of FTX in 2022
BlockFi, a well-known former centralized crypto lending platform, went into bankruptcy in 2022 after the unexpected collapse of the FTX exchange.
In particular, on November 28 of that year, after having indefinitely closed withdrawals on its website, it had declared its insolvency.
The cryptographic company was indeed financially heavily exposed on FTX, and when the latter imploded, BlockFi’s funds disappeared into thin air.
By signing the chapter-11 of the United States bankruptcy law, the cryptocurrency lender has initiated a phase of closing operations and reorganization.
The corporate restructuring and the liquidation of all assets under the lending platform was then entrusted to “Kroll Restructuring Administration”.
Following various legal feuds against SBF, SVB and 3AC, BlockFi managed to regain part of the liquidity it had ceded to its partners.
In October 2023 the company tried to recover by attempting to emerge from bankruptcy but every effort was in vain.
In May of this year, it permanently closed its web portal, suggesting that there will be no restart of the crypto business.
Despite this, all the necessary assets have been recovered to ensure full payment of refunds to the platform’s creditors.
Now about 10 billion dollars in cryptocurrencies are about to return to the hands of the respective 10,000 entitled individuals. Among the largest creditors, we find Ankura Trust Company, which still holds a balance of 730 million dollars after 2 years from the incident.
There are then various cryptographic companies involved with hundreds of millions of credits, in addition to the SEC from the United States that had executed a “settlement” of 30 million.
There is also a single client who had deposited as much as 48 million in crypto assets on the platform.
BlockFi announces start of crypto refunds in July
After closing a deal with Coinbase in May 2024, BlockFi is ready to distribute the first interim refunds to the respective creditors.
The cryptocurrency exchange has been tasked with managing distributions to customers systematically and facilitating repayment processes.
Yesterday BlockFi published an announcement in which it specifies the start of refunds this July. The transactions will be executed in batches and will continue in the following months.
According to recent communications, the payments in question are intended for a specific category of users who have not yet withdrawn their cryptocurrencies.
In fact, all those who have not withdrawn their digital assets by April 28, 2024, and have not completed the KYC by May 10, 2024, will find their assets available on Coinbase.
As described in our previously announced Coinbase distribution partnership blog post (https://t.co/M0T56YiKAe), BlockFi will commence first interim crypto distributions through Coinbase in July 2024.
— BlockFi (@BlockFi) July 17, 2024
The announcement highlights a significant restriction for non-U.S. customers. Due to regulatory requirements, these customers cannot receive funds at this time.
If you are involved in the matter and are not USA citizens or do not have a verified account on Coinbase, do not worry.
At the moment BlockFi is not able to independently distribute money without its partner Coinbase, due to bureaucratic reasons.
In the following months, however, if you are on the list of creditors and have not yet received a refund, you will be repaid through a cash distribution.
It is not yet clear, however, what the waiting times will be for this last type of reimbursement plan.
If you have any doubts about how to withdraw your crypto assets on Coinbase, you can take a look at this blog post.
Attention to scams
Based on the latest announcement from BlockFi, eligible customers for the redemption of crypto funds will be notified via the email associated with the company’s account.
It is essential that customers’ email addresses are up to date to avoid delays in receiving notifications about their distributions.
No notification will be advanced directly by the BlockFi team on social media and no subject connected to the lending platform will write to you privately.
The communication email that will arrive can eventually be managed by Coinbase, or by other collaborators of restructuring like Kroll.
Pay very close attention in this phase, as the risk of scam is extremely high.
The creditors will certainly receive several fraudulent emails, complete with phishing links, malware, and ransom requests. Do not click on any email or link that does not come from BlockFi or its partners.
Their official email addresses are as follows:
Kroll: BlockFiinfo@ra.kroll.com or BlockFiBankruptcyNoticing@noticing.ra.kroll.com
Kroll’s claims distribution partner: noreply@digitaldisbursements.com
Coinbase: CBBlockFiExchDistro@coinbase.com or info@mail.coinbase.com
Please keep in mind that client communications will exclusively occur via official email channels, on social media @BlockFi, via our claims agent, Kroll (blockfiinfo@ra.kroll.com or BlockFiBankruptcyNoticing@noticing.ra.kroll.com), or Kroll’s claims distribution partner Digital…
— BlockFi (@BlockFi) July 17, 2024
Already in March 2024 BlockFi had dealt with cases of advanced fraudulent activities on email channels. On that occasion, the scammers pretended to be employees of the platform and deceived users into thinking that their balances would be withdrawn shortly, unless a “withdrawal cancellation” was made.
The request for cancellation, however, was actually nothing more than a scam link that would steal the access data of the clients, with which to execute the theft of cryptocurrencies.
As reported by a user X, the email seemed to come from the restructuring team of BlockFi and the communication appears well organized.
The same cryptographic security expert added that:
“It is very likely that these emails are due to the violation of the MailerLite database in January. This is because the same sender information is present on both these fake BlockFi emails.”
The emails appear to come from the BlockFi restructuring team with an update on their court case and offer affected users the chance to withdraw their remaining balances… just click here and prove you own the wallet in question! pic.twitter.com/zXaFmQLtMD
— Plum (@Plumferno) March 23, 2024
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