BlockFi Clears FTX-Related Claims, Readies For Final Creditor Distributions

Crypto lending company BlockFi, which filed for bankruptcy in 2022 following the collapse of crypto exchange FTX, announced on Monday the successful sale of its FTX claims. This marks another step towards completing BlockFi’s bankruptcy process, allowing for the final distribution of funds to creditors. 

According to Monday’s announcement, the sale of FTX claims was completed at a “substantial” premium to their face value, which the plan administrator said is intended to ensure a “near-term” final distribution of 100% to all allowed customers and general unsecured creditors.

‘Best Possible Outcome For Customers’

BlockFi’s plan administrator, Mohsin Y. Meghji, disclosed in the announcement that he had filed a report to the United States Bankruptcy Court for the District of New Jersey, confirming the transaction’s closing that monetizes all claims against FTX. 

Meghji believes this is the “best possible outcome” for BlockFi’s customers, even stating that it exceeds expectations from when the bankruptcy cases were first filed in November 2022. Meghji further said:

…These results, achieved through tireless efforts by various parties, are remarkable. We intend to commence the Final Customer Distribution as quickly as reasonably practicable

As reported by Bitcoinist, in March 2024, BlockFi settled with FTX and the bankrupt crypto exchange’s trading arm, Alameda Research, enabling BlockFi to receive $874.5 million in claims against them. 

This settlement paved the way for subsequent distributions to BlockFi customers based on anticipated FTX distributions. An important aspect of the settlement was the plan administrator’s option to monetize the FTX Claims through a third-party sale.

BlockFi’s Platform Inactive, Repayment Progresses

Just a month ago, in June, the plan administrator determined that a sale of the FTX Claims at a level that maximized customer returns and generated significant recoveries for subordinated creditors was feasible. 

The sale process commenced on June 24, 2024, and concluded on July 10, 2024, with the highest and best bid acceptance. Interestingly, the purchase price exceeded the face value of the FTX Claims, providing substantial value to BlockFi and its creditors.

It was also disclosed that BlockFi’s platform is no longer active, and any “in-kind” distributions will be facilitated through the plan administrator’s collaboration with Coinbase. In the wake of this, users have reported receiving notifications from the US-based exchange, indicating successful matching of their identifying information with BlockFi’s data. 

However, despite the sense of progress in the bankrupt crypto lender’s bankruptcy proceedings, Bitcoinist also reported on July 19 that while many customers expressed excitement and viewed the repayment development as positive news, some remained skeptical and stressed the need to see the funds deposited into their Coinbase accounts.

Featured image from DALL-E, chart from TradingView.com