BlockFi Opens Wallet Withdrawals After Emerging From Bankruptcy

The bankrupt crypto lender asked BlockFi Wallet users to submit a withdrawal request from its website to begin claiming their funds.

BlockFi, the crypto lender that declared bankruptcy nearly 11 months ago, has officially begun the process of returning assets to customers.

In an Oct. 24 announcement, the firm announced that it had emerged from bankruptcy and its reorganisation plan had been approved by all relevant stakeholders.

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 an accompanying blog post, BlockFi said that it would now attempt to recover assets from firms that it believes owe money, including bankrupt crypto exchange FTX and now-defunct crypto hedge fund Three Arrows Capital (3AC).

Perhaps, most importantly, the firm will distribute digital assets back to clients that had them locked on the platform for the better part of a year. BlockFi said that all Wallet customers would be able to submit a request through its website. However, they will have to do so before the withdrawal window closes on Dec. 31.

Meanwhile, BIA and loan customers will receive their first wave of distributions over the next few months based on amounts approved in the bankruptcy plan. 

BlockFi said it would send an email prompt to customers when the process for the first way of distributions is underway, but the amount of recoveries they are entitled to will largely be contingent on BlockFi’s own recoveries from FTX and other firms.

At the time of writing, Bitcoin was trading at $34,019, gaining 18% over the last seven days – a rally that many market participants attribute to the growing optimism around an approval of a spot Bitcoin ETF. According to Messari CEO Ryan Selkis, if the U.S. Securities and Exchange Commission (SEC) approved a spot ETF, many creditors impacted by bankruptcies in the crypto industry, including BlockFi’s, would be made whole.

The SEC’s first two priorities are protecting investors and promoting fair, efficient markets.

If they approve a spot ETF, all GBTC investors would be made whole in BTC terms, and all creditors of FTX, Genesis, BlockFi, Gemini, and others would likely be made whole in $ terms.

— Ryan Selkis 🪳 (@twobitidiot) October 17, 2023