BlockFi, a leading cryptocurrency lending platform, has successfully emerged from bankruptcy and is now ready to repay some of its creditors. The company announced on October 24, 2023, that it has officially begun enacting the actions detailed in its bankruptcy recovery plan.
BlockFi is pleased to announce that its bankruptcy plan (the “Plan”) is effective and the company has emerged from bankruptcy as of October 24, 2023 (the “Effective Date”).
— BlockFi (@BlockFi) October 24, 2023
With its successful emergence from bankruptcy, the company is now in a position to pursue asset recovery from other entities it deems indebted to it. This includes cryptocurrency platforms that have also declared bankruptcy, such as Three Arrows Capital (also known as “3AC”) and FTX. Additionally, the company is now capable of resuming the distribution of assets to its creditors and the processing of claims.
How BlockFi Overcame Bankruptcy
BlockFi has stated that withdrawals are currently available to nearly all Wallet customers. Customers with assets on BlockFi are instructed to log into the app and submit a withdrawal request, which will allow the team to process the withdrawal.
BlockFi has indicated that it is gearing up to initiate distributions to its BlockFi Interest Account (BIA) and Loan customers, in line with the stipulations of its bankruptcy plan. The company anticipates that these initial distributions will commence in early 2024.
Subsequent distributions are planned beyond this point, however, the volume of funds to be distributed hinges on several factors, including the outcome of BlockFi’s litigation in the FTX bankruptcy case.
The achievement of this milestone is a testament to the diligent efforts of the company’s management, advisors, and stakeholders over the past 11 months. Their speed and efficiency in this process stand out when compared to many other retail crypto companies.
BlockFi, a cryptocurrency lending platform, first encountered liquidity issues in mid-2022 following the collapse of the Terra stablecoin. During this period, FTX provided a lifeline to the platform with a $400 million credit line. However, FTX’s subsequent bankruptcy in November also led to BlockFi’s downfall.
The company’s recovery plan marks a significant step forward for BlockFi and its customers. It also serves as a reminder of the risks and volatility inherent in the cryptocurrency market. As BlockFi navigates its post-bankruptcy landscape, the crypto industry will undoubtedly be watching closely.