BlockFi partners with Coinbase to distribute assets recovered from FTX

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As a researcher with a background in finance and experience following the crypto industry, I find this news concerning. The collapse of major players like FTX and BlockFi highlights the volatility and risks inherent in the crypto market.

BlockFi, a cryptocurrency lending platform previously assessed at a valuation of $3 billion, has shut down its website and arranged for distribution of funds salvaged from the failed crypto exchange FTX through Coinbase.

In a blog update posted on May 9, 2023, BlockFi announced its intention to shut down its web platform sometime during the same month. This decision comes in the wake of the bankruptcy proceedings the company underwent earlier in the year due to the ripple effect of FTX’s collapse and subsequent series of bankruptcies.

The Jersey City-based company, BlockFi, has announced that following the stated deadline, clients will no longer be able to use the BlockFi platform due to ongoing work and initial distribution processes, although the exact schedule is yet to be finalized.

BlockFi is thrilled to reveal that Coinbase will serve as our new distribution partner. This collaboration guarantees uninterrupted access to crypto withdrawal services for eligible BlockFi Interest Account (BIA), Retail Loan, and Private clients.

— BlockFi (@BlockFi) May 9, 2024

To guarantee that debts are evenly distributed among creditors and customers, BlockFi has teamed up with crypto exchange Coinbase. This collaboration enables “eligible” customers to continue withdrawing their crypto assets through Coinbase during times when BlockFi’s platform may be undergoing maintenance or other disruptions. Instructions for making these withdrawals via Coinbase will be sent to eligible customers through emails registered with the company.

As a financial analyst, I would propose paraphrasing it this way: “I, as the Plan Administrator, can utilize Coinbase for dispersing future fund distributions, which may include amounts derived from recoveries at FTX.”

For individuals who can’t create an account on Coinbase, BlockFi guarantees that all payments will be issued in the form of cash. It is recommended that customers save a copy of their transaction records, tax documents, and any other crucial information from the platform prior to the closure date.

As an analyst, I would describe BlockFi’s experience with bankruptcy as follows: In November of last year, I found myself facing financial hardships due to the unpredictable nature of crypto markets and my heavy exposure to FTX. Consequently, I had to file for Chapter 11 protection to buy some time and restructure my debts. However, against all odds, within less than a year, I managed to make it through the bankruptcy proceedings and am now taking steps towards fulfilling my obligations to my creditors.

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2024-05-10 10:20