BlockFi, a former centralized crypto lender, recently announced the successful completion of the sale of its FTX claims, marking a significant step towards the company’s resolution and promising full repayment to eligible creditors. The plan administrator, Mohsin Y. Meghji, revealed that the sale of FTX claims began on June 24 and ended on July 10, with the winning bid securing a substantial premium above face value. The exact details of the sale were not disclosed, but a third party facilitated the transaction. This development follows BlockFi’s $874.5 million settlement with FTX and Alameda Research estates in March 2023, paving the way for distributions to the company’s creditors.
The sale of FTX claims, totaling $874 million, includes claims against Alameda and FTX, with a $185 million FTX customer claim among them. This sale is expected to lead to a final distribution covering 100% of eligible customer and general unsecured creditor claims. Customers can anticipate receiving their distributions in fiat terms soon. With the closure of BlockFi’s web platform on May 9, the company announced plans to make temporary crypto distributions via Coinbase in July, with fiat claims managed by Kroll and Digital Disbursements. However, non-U.S. clients may need to undergo additional identity verification and Know Your Customer (KYC) processes to receive their distributions.
BlockFi’s journey towards bankruptcy began in November 2022 when the company halted customer withdrawals and filed for Chapter 11 bankruptcy protection. The company operated similarly to a bank, offering interest-yielding deposit accounts by loaning out user deposits to clients in the crypto industry. Following the collapse of the Terra ecosystem, FTX, and Three Arrows Capital in 2022, the crypto lending sector faced significant challenges. Other firms, including Celsius, Voyager Digital, and Genesis, also filed for bankruptcy amid the industry’s struggles. BlockFi’s financial troubles were primarily linked to its exposure through loans to Alameda Research, the hedge fund associated with FTX.
Despite the setbacks, BlockFi managed to allow its Wallet customers to withdraw funds in October 2023, offering some relief amidst the ongoing bankruptcy proceedings. As the company moves forward with the sale of FTX claims and plans for distributions, creditors can expect to see some resolution to the long-standing issues stemming from BlockFi’s bankruptcy. The recent developments signify a step towards the closure of the company’s operations and the fulfillment of its commitments to creditors. With plans in place for distributions to be made in the near term, customers and creditors can look forward to the resolution of the BlockFi saga.
