Bankrupt crypto lending platform BlockFi recently announced that it will begin paying back customers who failed to complete withdrawals through the platform this month. Following the web platform’s shutdown in May, temporary crypto distributions will also be conducted through its partnership with crypto exchange Coinbase.
BlockFi Announces First Temporary Crypto Distribution
In May, BlockFi announced that it would be shutting down its online platform at the end of the month. The crypto lending company also revealed that it had partnered with crypto exchange Coinbase to withdraw customer funds. Through the partnership, eligible users who missed the April 28 withdrawal deadline will be able to access their crypto withdrawals via Coinbase.
On July 17, lending platform X revealed that its first temporary crypto distributions will begin this month through Coinbase. According to the announcement, customers who meet certain criteria will receive payments through a distribution partner.
First interim crypto distribution announced. source: BlockFi on X
The criteria included eligible crypto users who did not receive the first interim distribution before BlockFi shut down and customers eligible for additional crypto distributions. Eligible users outside the US will not receive the funds at the same time. BlockFi cited “regulatory requirements” applicable to customers outside the US as the reason for the delay.
However, it confirmed that “the plan administrator has been working tirelessly with BlockFi International’s joint liquidators to implement a distribution to non-US clients in compliance with Bermuda regulations.”
The crypto lending platform explained that the distributions will be processed in batches over the coming months, and customers will receive an email notification to the BlockFi account on file.
Additionally, it explained that users who have not completed identity verification by the May 10 deadline can withdraw their assets via Coinbase if they have created or already have a verified account on the cryptocurrency exchange. Users who choose to exit a Coinbase verified account will receive their distributions in cash.
Eligible users will receive a notification from Coinbase.
BlockFi users reported receiving notifications from Coinbase on Thursday. In a subreddit dedicated to crypto lending platforms, customers shared emails informing them that their Coinbase identification information had successfully matched the crypto lending platform’s data.
Many customers expressed their happiness and claimed that the payment development was “very good news.” However, some customers shared some skeptical comments regarding the distribution situation.
Customers begin receiving Coinbase emails. Source: r/blockfi
“It’s still just a matter of talking to BF/Kroll” until they see the funds in their Coinbase account, one Reddit user claimed. Another Reddit user noted how long they’ve been waiting, stating that they “expect to see a deposit on or around December 13, 2028.”
With the first round of emails received, the crypto lending platform urged users to be wary of phishing scams. It warned that customer communication should only be done via official email channels, social media, our claims agent, Kroll, Kroll’s claims distribution partner, or Coinbase.
On November 22, BlockFi filed for Chapter 11 bankruptcy protection in the US District of New Jersey after being impacted by the collapse of Three Arrows Capital (3AC) and FTX.
At the time, the platform said it had $257 million in cash and more than 100,000 creditors with hundreds of millions in unsecured claims. Among the list was the U.S. Securities and Exchange Commission, which was listed as a creditor with $30 million in unsecured claims.
Earlier this year, BlockFi reached an agreement with FTX and its trading arm Alameda Research to settle claims worth nearly $1 billion. The settlement included FTX acknowledging the total amount held.
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