Crypto lending platform BlockFi has successfully emerged from bankruptcy and is now in the process of repaying some creditors. In an announcement on October 24, the company revealed that "withdrawals are currently available to nearly all wallet customers." Furthermore, BlockFi Interest Account (BIA) and loan customers will soon be able to withdraw a portion of their assets early in 2024.
BlockFi's exit from bankruptcy allows the platform to pursue the recovery of assets from other firms it believes owe it money. This includes companies like Three Arrows Capital (3AC) and FTX, both of which have also faced financial difficulties. Additionally, BlockFi can now continue distributing assets to creditors and processing claims from affected users.
The company has instructed its Wallet customers to log into the application and submit withdrawal requests, which will enable the team to process these withdrawals promptly. For BIA and Loan clients, BlockFi is in the process of preparing initial distributions as outlined in its bankruptcy plan. The first distribution is expected to occur in early 2024, and subsequent allocations will follow. The exact amount of funds allocated will depend on various factors, including BlockFi's success in FTX's bankruptcy proceedings.
BlockFi encountered liquidity issues in mid-2022, primarily due to the collapse of the Terra stablecoin. During that period, FTX extended a lifeline to BlockFi with a $400 million credit line. However, FTX itself faced financial troubles and eventually filed for bankruptcy in November, followed by BlockFi. In August, a U.S. court approved a plan to wind down BlockFi and pay off creditors, allowing for the repayment of U.S. Wallet customers' funds. Nevertheless, withdrawal access for U.S. customers was not immediately granted. The most recent update in BlockFi's Wallet Withdrawal FAQ states that international users are now permitted to make withdrawals.
