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BlockFi Teams Up with Coinbase for Fund Distribution, Announces Web Platform Closure

May 10, 2024 at 01:18

BlockFi, the cryptocurrency lending firm, has announced it is shutting down its web platform as part of winding down operations and has partnered with Coinbase to facilitate the distribution of funds to its clients.

In a recent blog post, BlockFi detailed how its alliance with Coinbase will assist “eligible BlockFi Interest Accounts (BIA), Retail Loans, and Private Clients” in accessing and withdrawing their funds. This development follows BlockFi’s bankruptcy declaration in November 2022 after the collapse of FTX, which precipitated its financial troubles.

As of 2023, BlockFi had been working on plans to return crypto holdings to customers, setting an April 28, 2024 deadline for withdrawal requests. On May 9, the lender informed its clients that the window for withdrawing digital assets under the current estate distribution had closed. Clients were advised on how to set up a Coinbase account—either existing or new—to continue accessing their funds.

For clients who missed the initial withdrawal deadline and the subsequent May 10 cut-off for verification, BlockFi is offering a final opportunity to verify their details through the BlockFi platform. Those failing to establish a verified Coinbase account risk having their assets converted to cash and distributed accordingly.

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BlockFi also emphasized that future distributions, including potential recoveries from FTX, will continue through Coinbase, with no plans to collaborate with other platforms. The company warned investors to remain vigilant against scams by third-party entities pretending to offer legitimate withdrawal opportunities.

Past incidents of fraud involved deceptive emails mimicking official BlockFi communications, falsely promising immediate access to funds.

In March, BlockFi reached a significant $875 million settlement with FTX and Alameda Research estates, settling claims that had totaled about $1 billion. This agreement also included FTX waiving various counterclaims against BlockFi.

BlockFi’s CEO, Zac Prince, who testified in the criminal trial of FTX founder Sam Bankman-Fried, attributed BlockFi’s bankruptcy directly to the mismanagement at FTX.

In September 2023, a bankruptcy court approved BlockFi’s Chapter 11 plan, aimed at repaying its 10,000 creditors. BlockFi’s debt is estimated at up to $10 billion, owed to more than 100,000 creditors, including $1 billion to its three largest creditors and $220 million to the defunct crypto hedge fund, Three Arrows Capital.

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