The bankrupt crypto lender BlockFi will soon begin reimbursing its former customers’ crypto assets, with assistance from Coinbase. We will explain how the process works.
After last year’s market collapse, BlockFi is now starting to reimburse customers in cryptocurrencies. Their management has reported that they have found “the best possible solution” to engage with customers. But how will creditors retrieve their funds?
A Coinbase account will be necessary
First, you will need to create a Coinbase account. The American crypto lender will utilize Coinbase’s platform to redistribute the funds that were lost during last year’s crash. According to information on Coinbase’s website, “Based on BlockFi’s instructions, Coinbase will strive to distribute crypto assets weekly or monthly while the program is active, provided the lender has a corresponding Coinbase account.”
It is crucial for lenders that the details of their Coinbase account align with those of their BlockFi account, as they cannot use a different account to recover their funds.
Coinbase further adds that it will not process payments to non-U.S. customers, although it “is diligently collaborating with the joint liquidators of BlockFi International” to develop a repayment plan for such creditors as well.
Notification and Payment Process
Customers awaiting a crypto refund will first receive an email from BlockFi, followed by a notification from Coinbase regarding the deposit.
For customers who prefer their refunds in cash, their claims will be managed by the financial advisory firm Kroll, along with their payment processing partner, Digital Disbursements.
The Background of the BlockFi Collapse
BlockFi filed for bankruptcy last year after several crypto companies failed due to the collapse of crypto exchange FTX in 2022. The lender, which provided high-yield crypto accounts, suspended payments on its platform for the first time.
BlockFi then announced that it was contemplating filing for bankruptcy before ultimately seeking Chapter 11 bankruptcy protection in November 2022.
The New Jersey-based firm had over $1.2 billion in assets invested in FTX and its trading affiliate, Alameda Research, before both entities collapsed. According to the administrator, the sale of BlockFi’s claims against FTX “at a significant premium” allowed for the compensation of customers.
Bankrupt crypto lender BlockFi will soon start paying back its former customers’ crypto assets, with the help of Coinbase. We show you how the process will work.
After last year’s crash, BlockFi is now starting to compensate customers in the form of cryptocurrencies. Their manager according to succeeded in „the best possible solution” to reach out to customers. But how do creditors get their money back?
A Coinbase Account Will Be Required
To begin the process of receiving refunds, customers will need to create a Coinbase account. The American crypto lender will utilize Coinbase’s platform to redistribute funds that disappeared during last year’s crash. According to information on Coinbase’s website, “Based on BlockFi’s instructions, Coinbase will attempt to distribute crypto assets weekly or monthly while the program is active, provided the lender has an appropriate Coinbase account.”
It is crucial that the details on lenders’ Coinbase accounts match those on their BlockFi accounts, as mismatches may prevent the recovery of funds. Coinbase emphasizes that it will not process payments to non-US customers, although it is actively collaborating with the joint liquidators of BlockFi International to create a repayment plan for these creditors as well.
Notifications and Payments Process
Customers anticipating a crypto refund will first receive an email directly from BlockFi informing them of the repayment process. Following this, they will receive a notification from Coinbase confirming the deposit of their assets. For those who prefer a cash refund, their claims will be managed by financial advisory firm Kroll, in partnership with payment processing partner Digital Disbursements.
Understanding the BlockFi Bankruptcy Background
BlockFi’s significant downfall occurred last year amidst a widespread collapse in the cryptocurrency sector, primarily triggered by the infamous fall of crypto giant FTX in 2022. The lender, which had provided high-yielding crypto accounts to its customers, temporarily halted payments on its platform. Eventually, BlockFi announced it was considering filing for bankruptcy, which led to the formal filing for Chapter 11 bankruptcy protection in November 2022.
At the time of its collapse, the New Jersey-based firm held over $1.2 billion in assets tied to FTX and its trading arm, Alameda Research. The administrator revealed that the sale of BlockFi’s claims against FTX occurred “at a significant premium,” enabling the compensation of its customers.
Benefits of the BlockFi Repayment Program
- Protection of Customer Assets: Customers will finally see efforts to retrieve their funds, bringing closure to the anxious waiting period.
- User-Friendly Process: The use of Coinbase simplifies the repayment process, providing a reliable platform for distribution.
- Regular Updates: Customers will receive timely notifications about their refunds, maintaining transparency throughout the process.
Practical Tips for BlockFi Customers
- Create and Verify Your Coinbase Account: Ensure that you have a verified Coinbase account ready to receive your funds. Double-check that the details match your BlockFi account to avoid complications.
- Monitor Your Email: Keep an eye on your email for communications from both BlockFi and Coinbase to stay updated on your refund.
- Consider Your Preferences: Decide whether you prefer to receive your repayment in crypto or cash, and follow the appropriate procedures for each.
Case Studies and First-Hand Experiences
Customer Experience Before the Bankruptcy Collapse
Many BlockFi users experienced a rollercoaster of emotions during the months leading up to the bankruptcy. With high interest rates on their deposits, customers were initially drawn to BlockFi as a stable place to grow their crypto investments. However, the unexpected halt in withdrawals and the ensuing uncertainty about the future left many feeling anxious and frustrated.
Customer Experience Post-Bankruptcy Filing
As the news of the repayment program broke, several users expressed relief and cautious optimism. “It feels like a weight has been lifted, and I finally see a glimmer of hope in retrieving my assets,” shared one user who had funds tied up in BlockFi. Meanwhile, others remain skeptical, recalling past experiences with delays and communication breakdowns.
Frequently Asked Questions (FAQs)
1. How long will it take to receive my funds?
The repayment timeline will vary based on BlockFi’s processes and the volume of claims. Customers can expect weekly or monthly distributions according to the guidelines provided by Coinbase.
2. What if my Coinbase account is different from my BlockFi account?
Unfortunately, funds will not be retrievable if the account details do not match. It is vital to ensure that both accounts are correctly aligned to avoid loss of funds.
3. Will I receive interest on my refunded crypto?
Refunds will be processed based on the original amounts deposited. Any interest accrued during the period of BlockFi’s operations would not typically be included in the refund total.
4. What should I do if I have a claim against BlockFi International?
BlockFi is currently working on a separate repayment plan for non-US customers through its international liquidators. Keep an eye on updates directly from BlockFi for specific details related to your claims.
