Crypto lender Blockfi is moving closer to returning funds to clients after a bankruptcy judge confirmed its Chapter 11 plan on Tuesday. The plan outlines a process for the company to distribute the remaining assets to clients and attempt to recover additional funds.
Blockfi Advances on Client Asset Reimbursement Following Chapter 11 Plan Approval
With over 90% of voting creditors approving the plan, Blockfi expressed optimism about providing client recoveries relatively quickly compared to similar crypto bankruptcies. The plan confirmation comes after Blockfi originally filed for bankruptcy protection in November 2022, amid the broader crypto market downturn.
Under the approved plan, Blockfi will first distribute the remaining digital assets back to clients with funds in Blockfi Wallet accounts. The company will then make an initial distribution to clients with funds in Blockfi Interest Accounts (BIAs) and retail crypto-backed loans.
“Over the coming months, you will receive an email prompting you to withdraw your funds based on the recovery amounts approved by the plan,” Blockfi told BIA and loan clients in a blog post. The firm expects wallet withdrawals to conclude before distributions to other clients begin.
Additional distributions to clients will depend on Blockfi’s success in recovering funds from the FTX bankruptcy case. Blockfi claims FTX owes it money and intends to pursue litigation to obtain those assets. Any funds recouped from FTX could increase client payouts.
Before distributions can formally start, a Bermuda court overseeing Blockfis international clients must recognize the U.S. bankruptcy court’s plan approval. Once finalized, Blockfi can emerge from bankruptcy and enact the wind-down process outlined in the plan.
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