The US Securities and Exchange Commission (SEC) has agreed to postpone the payment of a $30 million fine imposed on bankrupt cryptocurrency lender BlockFi until creditors have been repaid. This amount represents the remaining balance of a $50 million settlement reached with regulators in February 2022. According to court documents from June 22, the SEC will forego the owed sum from BlockFi to facilitate the timely distribution of funds to investors and ensure that other allowable claims are fully paid before the regulator receives any payment. The SEC had taken action against B lockFi for failing to register its high-yield interest accounts as securities.
The SEC's decision places it at the top of the list of BlockFi's creditors, alongside West Realm Shires Services Inc., also known as FTX US, as outlined in the court documents. BlockFi filed for Chapter 11 bankruptcy protection in November, following concerns about it's financial stability amid the FTX crisis. At the time of the bankruptcy filing, BlockFi had $256.9 million in liquidity, according to the documents.
On May 11, a federal judge permitted BlockFi to refund $297 million to customers who held deposits in its Wallet program. However, this refund does not apply to users of BlockFi Interest Accounts (BIAs) associated with the lending business, as those accounts are part of the bankruptcy estate. The BIA accounts of BlockFi currently hold over $375 million.
Furthermore, BlockFi will be issuing refunds exceeding $100,000 to customers in California, despite the company ceasing trading on November 10. An investigation conducted by the California Department of Financial Protection and Innovation revealed that at least 111 borrowers in the st ate repaid approximately $103,471 in loans after BlockFi filed for Chapter 11 bankruptcy.
