Bankrupt BlockFi Now Allows Withdrawals to Wallets

By: Micheal Wilson

Bankrupt BlockFi Now Allows Withdrawals to Wallets

October 25, 2023 5:37 AM

BlockFi has indicated that it will process withdrawal requests from users in the United States and all other countries.

On October 24, a blog post announced that BlockFi, a platform for crypto lending, had emerged from bankruptcy and would begin repaying some of its creditors. The statement noted that withdrawals "are currently available to nearly all Wallet customers" and that customers of the Blockfi Interest Account (BIA) and Loan would have access to some assets in early 2024.

The article claims that now that BlockFi has emerged from bankruptcy, it can pursue asset recovery from other companies that it believes owe it money. This includes defunct crypto exchanges, including FTX and the Three Arrows Capital (or "3AC") cryptocurrency exchange. The company will also be permitted to continue paying out claims and transferring assets to creditors.

The team has requested that Wallet users who have assets stored on BlockFi join the app and file a withdrawal request. BlockFi has announced that it is prepared for initial distributions to BIA and loan clients in compliance with the bankruptcy plan. They anticipate the first payouts will occur sometime in 2024. After this point, more payouts will be made, with the total amount dependent on BlockFi's success in bankruptcy proceedings against FTX, among other things.

Midway through 2022, when the Terra stablecoin failed, BlockFi, a cryptocurrency lending platform, began to experience liquidity issues. FTX provided a $400 million credit line that saved the platform at the time. Later that month, in November, FTX filed for bankruptcy, thereby ending BlockFi as well.

The bankruptcy court in the United States accepted a plan to wind down the company and refund creditors on August 17, allowing BlockFi to return its U.S.-based Wallet clients. However, at that time, the court did not permit withdrawals from U.S. consumers. There has been an update to the BlockFi Wallet withdrawal FAQ to reflect the fact that users outside of the United States can now make withdrawals.