Cryptocurrency lender Blockfi is moving closer to returning funds to customers after a bankruptcy judge confirmed its Chapter 11 plan on Tuesday. The plan outlines a process for the company to distribute remaining assets to clients and attempt to recover additional funds.
Blockfi advances payment of customer assets following approval of Chapter 11 plan
With more than 90% of voting creditors approving the plan, Blockfi expressed optimism in achieving customer recoveries relatively quickly compared to similar crypto bankruptcies. Confirmation of the plan comes after Blockfi originally filed for bankruptcy in November 2022 amid the broader crypto market crash.
Under the approved plan, Blockfi will first distribute the remaining digital assets to customers funded in Blockfi Wallet accounts. The company will then make an initial distribution to customers with funds in Blockfi Interest Accounts (BIA) and cryptocurrency-backed retail loans.
“In the coming months, you will receive an email asking you to withdraw your funds based on the recovery amounts approved by the plan,” Blockfi told BIA and loan customers in a blog post. The company expects portfolio withdrawals to be completed before distributions to other clients begin.
Additional distributions to customers will depend on Blockfi’s success in recovering funds from the FTX bankruptcy case. Blockfi claims that FTX owes it money and intends to litigate to obtain these assets. Any funds recovered from FTX could increase customer payments.
Before distributions can formally begin, a Bermuda court that oversees Blockfis’ international clients must recognize the U.S. bankruptcy court’s approval of the plan. Once completed, Blockfi can emerge from bankruptcy and implement the liquidation process outlined in the plan.
