Transition to Coinbase for Client Withdrawals
BlockFi, a centralized crypto lender, has announced a strategic partnership with Coinbase to facilitate crypto withdrawals for its clients following the shutdown of its web platform later this month. This collaboration aims to ensure that BlockFi clients continue to have access to their crypto assets seamlessly.
Details of the Closure and Withdrawal Process
As BlockFi prepares to cease operations on its web platform, the company has established a process to maintain continuity for client withdrawals. Clients who missed the initial withdrawal deadlines set for April 28 and May 10 can still access their assets through an approved Coinbase account, without the need for immediate conversion to cash.
Specifics for Unverified Coinbase Accounts
For clients who are eligible to withdraw their crypto but did not meet the verification deadline and do not have a verified Coinbase account, their assets will be automatically converted to cash and distributed according to the planned procedures.
Future Distributions and FTX Involvement
BlockFi has also confirmed that it will continue to use Coinbase for future distributions. This includes any potential recoveries from FTX, as BlockFi navigates the aftermath of its Chapter 11 bankruptcy filing. The firm had previously reached an $875 million in-principle settlement with the estates of FTX and Alameda Research.
BlockFi’s Journey to Bankruptcy
BlockFi paused customer withdrawals in November 2022 and filed for Chapter 11 bankruptcy shortly thereafter. The bankruptcy court approved BlockFi’s plan in September 2023, which outlined the repayment to its 10,000 creditors. BlockFi’s operations, akin to a bank’s, involved loaning out user deposits to other crypto clients, a practice that became unsustainable following the 2022 collapse of several major players in the centralized crypto lending market.
Implications for the Crypto Lending Industry
The closure of BlockFi’s platform and its partnership with Coinbase represent significant developments in the crypto lending industry, which has faced numerous challenges over the past year. This move could set a precedent for how distressed crypto firms manage client assets during liquidation or restructuring phases.
