Placed under the protection of the notorious Chapter 11 nearly a year ago, BlockFi announced on Tuesday that it had emerged from bankruptcy. What are the next steps for the cryptocurrency platform?
BlockFi announces exit from bankruptcy
While the platform was a collateral casualty of 2022, BlockFi unveiled its exit from bankruptcy on Tuesday evening:
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
In concrete terms, this means that the process initiated by the use of the famous Chapter 11 has been a success, and that after 11 months of bankruptcy, the company is entering its final stage, which should see the repayment of its creditors and therefore, its customers.
Last month, BlockFi announced that 90% of its bankruptcy plan had already been approved by the various stakeholders.
Thus, while this had been possible since August for US customers only, all users of the platform can now withdraw cryptocurrencies present on the “Wallet” under certain conditions.
These cryptos must not be “trade-only” assets, i.e. cryptos that were not originally transferable. Secondly, they must not have withdrawn or transferred more than $7,575 from the BlockFi Interest Account (BIA) or BlockFi Private Client Account (BPC) within 90 days of November 28, 2022.
BIA assets and lending still pending
For the time being, BIA assets and lending products are not yet available for withdrawal. Speaking of lending, let’s not forget the links with FTX and Three Arrows Capital (3AC), BlockFi having been at the forefront of the fund’s bankruptcy by liquidating its assets in June 2022.
As a result, the platform is now trying to recover as many of the assets owed by FTX, 3AC “and other companies” as possible, in order to pay back as much as possible to its own creditors.
If the end of the bankruptcy means that an initial distribution phase is about to be announced, BlockFi’s ability to recover as much as possible from the players concerned will determine the percentage of their deposit that customers will be able to recover:
” Further updates on the timing of this initial distribution will be sent in the coming months. Our goal is to begin initial distributions in early 2024. Any subsequent distributions will depend on many factors, including potential recoveries from FTX and its affiliates. “
A few months before filing for bankruptcy, BlockFi was already going through a rough patch, forced by the Securities and Exchange Commission (SEC) to pay $100 million in fines in February 2022, its BIA having been accused of violating securities laws. The following June, the platform also laid off 20% of its staff.
Despite everything, the speed of this exit from bankruptcy is to be commended, which will enable aggrieved customers to recover part of their investment.