Defunct crypto lender BlockFi announced the sale of its FTX claims at a “substantial premium to their face value.”
The transaction will enable a final distribution of 100% of eligible customer and general unsecured creditor claims, the firm said.
BlockFi has confirmed the sale of its FTX claims as the defunct centralized crypto lender’s bankruptcy process nears completion.
BlockFi plan administrator and M3 Partners Managing Partner Mohsin Y. Meghji reported the sale to the United States Bankruptcy Court for the District of New Jersey on Monday, according to a statement. The sale process began on June 24 and concluded on July 10 after the “highest and best bid” was determined at a “substantial premium to their face value,” monetized via an undisclosed third party, Meghji said.
BlockFi reached an $874.5 million, in-principle settlement with the FTX and Alameda Research estates in March, enabling the plan administrator to begin planning for subsequent distributions to BlockFi creditors based on the anticipated value. The sale will allow a “near-term” final distribution of 100% of eligible customer and general unsecured creditor claims in fiat terms, the firm said.
“This transaction marks a final chapter in the wind-down and is the best possible outcome for customers of BlockFi,” Meghji said. “These recoveries on customer claims, and the timeline those recoveries will be distributed on, were unimaginable when these cases were filed in November 2022. We intend to commence the final customer distribution as quickly as reasonably practicable.”
BlockFi shut down its web platform in May and last week announced it would begin in-kind crypto distributions via Coinbase in July, processed in batches over the coming months. BlockFi clients’ fiat claims are not being processed by Coinbase. Eligible cash distributions are instead handled by Kroll and its payment processing partner, Digital Disbursements.
However, non-U.S. clients are not eligible to receive funds at this time. “Distributions to BlockFi International creditors, in particular, may require additional identify verification and Know Your Customer diligence in compliance with international standards,” the firm said.
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BlockFi’s collapse
BlockFi initially paused customer withdrawals in November 2022, filing for Chapter 11 bankruptcy protection shortly after. In September 2023, the bankruptcy court approved BlockFi’s plan to repay its 10,000 creditors.
BlockFi, as a centralized lender, provided interest-yielding deposit accounts and functioned similarly to a bank by loaning out user deposits to crypto industry clients.
The sector suffered significant setbacks after a tumultuous 2022 for centralized crypto lending services, seeing the bankruptcy of several firms, including Celsius, Voyager Digital and Genesis, following the collapse of the Terra ecosystem, FTX and 3AC.