Failed crypto lending firm BlockFi will this month start paying former customers back—in crypto—following its ignominious fall last year.
The administrator of the BlockFi wind-down said this week that it had achieved the “best possible outcome for customers.” But if you’re a creditor, how do you get your money back?
You’ll need a Coinbase account, for starters. The fallen crypto firm is using America’s biggest exchange to distribute funds that disappeared following BlockFi’s collapse last year.
“Upon instruction from BlockFi, Coinbase will continue to attempt to distribute crypto assets on a weekly to monthly basis while this program is active, provided that the creditor has an eligible account with Coinbase,” the exchange says on its website.
Each creditor's Coinbase information must be the same as their BlockFi credentials, as BlockFi customers cannot use someone else’s account to retrieve their funds.
Coinbase adds that it will not make distributions to non-U.S. customers—although it has “been working tirelessly with the Joint Liquidators of BlockFi International” to figure out a repayment plan for such creditors.
Customers expecting a crypto repayment will first receive an email from BlockFi before receiving a Coinbase notification about the deposit.
Former BlockFi customers hoping to get cash back will have their claims handled separately by financial advisory firm Kroll and their payment processing partner, Digital Disbursements.
BlockFi went bust last year as one of many crypto companies hit by the fallout of collapsed crypto company FTX in 2022. The lender, which offered its customers high-yield crypto accounts, first paused withdrawals on its platform.
The company then exclusively told Decrypt that it was considering bankruptcy before actually filing for Chapter 11 in November 2022.
BlockFi, a New Jersey company, had over $1.2 billion in assets tied up in crypto behemoth FTX and its trading arm Alameda Research before they both collapsed. The administrator said the sale of BlockFi's claims against FTX “at a substantial premium to their face value” recovered the funds to repay customers.
Edited by Ryan Ozawa.