Blockfi, a cryptocurrency lender, is getting closer to refunding client funds after a bankruptcy judge on Tuesday approved its Chapter 11 plan. The strategy details how the business would divide the remaining assets to customers and make an effort to raise more money.
Following the approval of the Chapter 11 plan, Blockfi advances on client asset reimbursement.
Blockfi indicated confidence in offering customer recoveries reasonably swiftly compared to other previous crypto bankruptcies after the proposal was approved by over 90% of voting creditors. The approval of the plan comes after Blockfi first requested bankruptcy protection in November 2022, in the midst of the general decline in the cryptocurrency market.
According to the agreed strategy, Blockfi will initially return any remaining digital assets to customers who have money in their Blockfi Wallets. Following that, the business will issue an initial distribution to customers holding assets in retail crypto-backed loans and Blockfi Interest Accounts (BIAs).
In a blog post, Blockfi informed BIA and loan clients, "Over the coming months, you will receive an email prompting you to withdraw your funds based on the recovery amounts approved by the plan." The company anticipates that distributions to additional clients won't start until wallet withdrawals are finished.
Whether Blockfi is successful in getting money back from the FTX bankruptcy case will determine whether or not it can make more distributions to customers. Blockfi contends that FTX owes it money, and it plans to file a lawsuit to seize those assets. Any money recovered from FTX may be used to boost customer compensation.
The U.S. bankruptcy court's acceptance of the plan must be acknowledged by a Bermuda court presiding over Blockfis' foreign clients before distributions can officially begin. As soon as everything is settled, Blockfi will be able to exit bankruptcy and begin the wind-down procedure stated in the plan.
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