Cryptocurrency lender BlockFi, now bankrupt, is in the process of winding down its operations, with plans to close its online platform by May. To facilitate this transition, BlockFi has struck a partnership with Coinbase, enabling customers to access and withdraw their funds. In a recent blog post, BlockFi announced that eligible account holders, including those with BlockFi Interest Accounts (BIAs), retail loans, and private clients, can now initiate withdrawals through Coinbase.
The decision to partner with Coinbase comes after BlockFi's declaration of bankruptcy in November 2022 following the collapse of FTX. Last year, BlockFi announced its closure and outlined a plan to return customers’ cryptocurrency holdings by April 28, 2024, setting a deadline for withdrawal requests. However, with this deadline passed, BlockFi is now guiding customers on establishing Coinbase accounts to facilitate asset withdrawals, whether utilizing existing or new accounts.
BlockFi is extending an additional opportunity to those who missed the initial withdrawal deadline and the subsequent deadline on May 10 to verify their accounts through the BlockFi platform. Failure to establish an approved Coinbase account may result in the liquidation of assets into cash and subsequent distribution. Administrators overseeing the program will continue to utilize Coinbase for future distributions, potentially involving funds recovered from FTX.
In its communication, BlockFi emphasized its exclusive partnership with Coinbase for cryptocurrency distribution, cautioning investors against engaging with third-party platforms to avoid potential scams. The company has previously encountered fraudulent activity, with individuals receiving deceptive emails mimicking legitimate communications and falsely promising immediate withdrawal of remaining balances.
In March, BlockFi reached an in-principle settlement worth $875 million with the estate of FTX and Alameda Research. This settlement resolved BlockFi’s claims against FTX, amounting to approximately $1 billion, while FTX abandoned various counterclaims against BlockFi. BlockFi CEO Zac Prince attributed the company's bankruptcy directly to the actions of FTX founder Sam Bankman-Fried, whom Prince testified against as a government witness in Bankman-Fried’s criminal trial. Last September, a bankruptcy court approved BlockFi’s Chapter 11 plan to reimburse its 10,000 creditors, with estimates suggesting debts of up to $10 billion to over 100,000 creditors, including significant sums owed to its largest creditors and bankrupt cryptocurrency hedge fund Three Arrows Capital.
