BlockFi has successfully sold its FTX claims at a significant premium over their nominal values. This milestone marks a critical step in BlockFi’s bankruptcy process. The sale is expected to facilitate the final distribution of 100% of eligible customer and general unsecured creditor claims. This development indicates that BlockFi’s bankruptcy proceedings are nearing their conclusion.
The plan administrator, Mohsin Y. Meghji, reported the sale to the United States Bankruptcy Court for the District of New Jersey. The sale process, which started on June 24 and concluded on July 10, resulted in an offer that significantly exceeded the nominal value of the claims. The details of the third party involved in the transaction remain undisclosed. However, the sale has enabled BlockFi to prepare for a final distribution to its creditors soon.
In March, BlockFi reached an agreement worth $874.5 million with the estates of FTX and Alameda Research. This agreement allowed the plan administrator to plan subsequent distributions to BlockFi creditors. The significant premium from the sale of FTX claims facilitates a 100% payment in fiat currency to eligible customers and general unsecured creditors. BlockFi views this outcome as the best possible scenario for its clients.
BlockFi’s final distribution process is set to begin as soon as possible, although the exact date is not yet specified. In May, BlockFi shut down its web platform and announced plans to start in-kind crypto distributions via Coinbase in July. These distributions will occur in batches over several months. Coinbase will handle the crypto distributions, while fiat claims will be processed by Kroll and payment processing partner Digital Disbursements.
Customers outside the US are currently not eligible to receive funds. BlockFi noted that distributions to BlockFi International creditors might require additional identity verification and Know Your Customer (KYC) diligence. This step is necessary to comply with international standards, which could delay the process for non-US customers.
BlockFi’s bankruptcy journey began in November 2022 when it halted customer withdrawals and subsequently filed for Chapter 11 bankruptcy protection. As of September 2023, the bankruptcy court approved BlockFi’s plan to repay its 10,000 creditors. BlockFi operated as a centralized lending institution, offering interest-bearing deposit accounts and lending user deposits to clients in the crypto space.
The recent sale of FTX claims and the impending distributions represent significant progress in concluding BlockFi’s bankruptcy proceedings, offering relief and resolution to its creditors and customers.
