BlockFi, a cryptocurrency lending firm currently undergoing liquidation, has announced it will shut down its web platform by the end of May 2024. As part of its bankruptcy proceedings, BlockFi is collaborating with Coinbase (NASDAQ:COIN), a prominent cryptocurrency exchange, to manage the distribution of assets to its clients.
Deadline for Withdrawals Is Over
BlockFi clients who failed to withdraw their assets from BlockFi by April 28 had their crypto transferred to Coinbase. This transfer ensures that clients will not receive their holdings in cash but will maintain access to their cryptocurrencies. BlockFi has emphasized the exclusivity of its partnership with Coinbase for this process and has warned its users to be vigilant against potential scams.
This partnership allows BlockFi clients to access their funds through existing Coinbase accounts or to set up new ones if they haven’t already. For clients unable to create a Coinbase account, the alternative is to receive their funds in cash.
Future Distributions and Recovered Funds
The plan administrator assigned to BlockFi’s bankruptcy case may utilize Coinbase for future distributions, including funds recovered from FTX. Previously, BlockFi had projected to receive approximately $875 million from FTX, of which only the first $250 million has priority; the remainder depends on FTX’s ability to fulfill its financial obligations during its bankruptcy proceedings.
BlockFi initially halted withdrawals on November 10, 2022, due to uncertainties surrounding FTX’s separate bankruptcy.
That event precipitated BlockFi’s bankruptcy filings, later revealing FTX as its second-largest creditor. After emerging from bankruptcy in October 2023, BlockFi has resumed paying its users this year, with Coinbase playing a pivotal role in these distributions.
The closure of BlockFi’s platform and its partnership with Coinbase mark one of the final chapters of the effects of FTX’s collapse in November 2022.