BlockFi emerges from bankruptcy and opens wallet withdrawals

Crypto lending platform BlockFi has emerged from bankruptcy and is ready to pay back some of its creditors, according to an October 24 blog post. Withdrawals “are currently available to nearly all Wallet customers,” the post stated, adding that Blockfi Interest Account (BIA) and Loan customers will be able to withdraw some assets in early 2024.

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

According to the post, BlockFi’s emergence from bankruptcy means that it can now attempt to recover assets from other firms it believes owe it money. This includes bankrupt crypto platforms such as Three Arrows Capital (also known as “3AC”) and FTX. The firm will also be able to continue distributing assets to its creditors and processing claims.

The team instructed Wallet customers with assets on BlockFi to log into the app and submit a withdrawal request, which will allow the team to process the withdrawal. As for BIA and Loan customers, BlockFi said it’s preparing for initial distributions in accordance with the bankruptcy plan. They expect the first distributions to be made in early 2024. Further distributions will be made after this point, but the amount of distributed funds will depend on BlockFi’s success in FTX bankruptcy litigation, among other factors.

BlockFi was a crypto lending platform that first ran into liquidity problems in mid-2022 as the Terra stablecoin collapsed. At the time, FTX rescued the platform with a $400 million credit line. FTX subsequently went bankrupt in November, taking down BlockFi with it. On August 17, a U.S. court ordered that BlockFi be allowed to repay U.S.-based Wallet customers, as a plan to wind down the company and repay creditors had been approved by the bankruptcy court. However, the court did not allow U.S. customers to withdraw at that time. The current BlockFi Wallet withdrawal FAQ contains an update stating that international users are now allowed to withdraw.