Bankrupt Crypto Lender BlockFi to Initiate Temporary Distribution via Coinbase in July

Bankrupt crypto lending platform BlockFi is set to commence its first temporary distribution of crypto assets through Coinbase starting in July.

In a recent post on X, the firm said eligible account holders can expect to receive email notifications regarding the distribution, which will take place in batches over the coming months.

However, it is important to note that non-US customers will not receive any funds due to regulatory constraints.

BlockFi Taps Coinbase for Distribution

In May, BlockFi announced a partnership with Coinbase to ensure the continuity of crypto withdrawals for eligible BlockFi Interest Account (BIA), Retail Loan, and Private Clients.

As the initial window for requesting a withdrawal of estate funds using BlockFi has closed, the platform is now working with Coinbase to facilitate the next steps.

BlockFi will provide clients with further details via email, including instructions on how to create a Coinbase account.

For those who missed the withdrawal deadline of April 28 or failed to complete identity verification by May 10, there is still an opportunity to receive funds.

These assets will be made available in kind if the individual has an open and approved Coinbase account.

However, if an approved Coinbase account is not created, the assets may be converted to cash and distributed accordingly, as outlined in the plan.

To facilitate future distributions, including those based on funds recovered from FTX, the Plan Administrator will utilize Coinbase as the platform of choice.

Without this partnership, the Administrator would only be able to distribute cash in subsequent rounds.

Clients who are unable to open a Coinbase account will receive their distributions in cash.

Please find all the information related to Coinbase distribution on the Coinbase Help Page (https://t.co/v4EBAKTd1X) and the BlockFi Client FAQs page (https://t.co/AGJcdrDNdh).

— BlockFi (@BlockFi) July 17, 2024

BlockFi became the first company to file for bankruptcy in the aftermath of the collapse of FTX.

The crypto lender has more than 100,000 creditors and owes between $1 billion and $10 billion to those creditors.

BlockFi Warns Against Scam Attempts

The firm also cautioned its clients to remain vigilant against scam attempts from third-party actors falsely claiming to offer crypto distributions.

The crypto lender added that it will not be partnering with any other providers for crypto distributions.

The warning came as crypto scammers have been targeting the creditors of bankrupt digital asset firms FTX and BlockFi.

In March, FTX and BlockFi claimants received legit-looking fraudulent emails luring them with a promise of instant withdrawals of their remaining balances.

“The emails appear to come from the BlockFi restructuring team with an update on their court case and offer affected users the chance to withdraw their remaining balances,” security expert Plumferno flagged in a thread on X.

Plumferno added that the perpetrators utilized a network of compromised emails from Mailer Lite’s data breach that occurred in January.

“It is very likely these emails are due to the MailerLite database breach in January,” Plumferno noted. “This is because the same sender info is present on both these fake BlockFi emails.”