The bankruptcy estate of the now-collapsed crypto lending platform BlockFi announced yesterday (Thursday) its plans to return “100 percent” of the distressed clients’ claims. However, it will calculate the value of the claims based on the date of the bankruptcy and not the current crypto market value.
Recovery of Funds from FTX
The return of the claim in its entirety became possible as the bankruptcy administrator of the bankrupt BlockFi “successfully sold… outstanding claims against FTX for an amount in excess of the face value of the claims.”
“While these recoveries cannot undo the impact of the platform pause, efficiently distributing 100% of the dollarised value of allowed claims to eligible clients in the near future is an extraordinarily positive outcome,” the announcement noted.
BlockFi entered into bankruptcy at the end of November 2022 after the collapse of FTX. Days before its bankruptcy filing, the platform even suspended withdrawals for its users, citing the lack of clarity regarding the situation with FTX.
Meanwhile, FTX is also preparing to return more than 100 percent of the claims to its distressed creditors, as it managed to recover significant cash after selling its assets. Similar to BlockFi, other creditors of FTX also sold their claims. Earlier, European digital asset investment company CoinShares received a return of £31.32 million on a £26.6 million claim.
Final Distribution in 90 Days
Meanwhile, BlockFi also highlighted that it “is working to make final distributions as quickly as possible.”
Although the US-based creditors of the collapsed crypto lending platform will likely receive the final distributions within the next 90 days, the international clients might have to wait longer. US-based clients were also instructed to set up their Coinbase accounts before 23 August to receive the claims.
“At this time, international clients can expect to receive their funds on a longer timeline due to certain Bermuda regulatory requirements,” BlockFi’s announcement added. “These regulatory requirements may require further identity verification and ‘Know Your Customer’ diligence for distributions that have not been made.”