BlockFi Announces Platform Shutdown Amid Crypto Lending Struggles

  • BlockFi, a struggling crypto lender, plans to shut down its web platform by May 2024.
  • BlockFi partners with Coinbase to facilitate cryptocurrency withdrawals for its clients.
  • CEO Zac Prince attributes BlockFi’s bankruptcy to actions by FTX’s founder, leading to an $875 million settlement.

The struggling cryptocurrency lender BlockFi is now a big step closer to winding up. The corporation with headquarters in New Jersey has announced that it will be closing its online platform by May 2024. Having struggled since declaring bankruptcy in November 2022 when FTX collapsed, BlockFi is now working with the large cryptocurrency exchange Coinbase to enable its clients’ fund withdrawals.

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BlockFi recently announced its collaboration with Coinbase with the intention of helping those eligible to withdraw their cryptocurrency holdings in a BlockFi blog post. This partnership includes Private Clients, Retail Loans, and BlockFi Interest Accounts (BIA). The action follows BlockFi’s declaration of closing in 2023 and returning client cryptocurrency assets.

BlockFi customers who did not receive instructions on opening a Coinbase account will receive instructions once the deadline for withdrawals from the current estate expires. Assets may be liquidated into cash if an authorized Coinbase account cannot be created. BlockFi warned investors against possible frauds by third parties and underlined its exclusive plan to work with Coinbase for cryptocurrency distributions.

BlockFi CEO Zac Prince attributes FTX’s bankruptcy to the company’s founder. When Prince testified for the government during Bankman-Fried’s criminal trial, he brought attention to how FTX’s bankruptcy had affected BlockFi’s financial struggles.BlockFi did, however, settle its claims against FTX with the estates of FTX and Alameda Research for $875 million in-principle.

In September 2023, the bankruptcy court authorized BlockFi’s Chapter 11 plan, which sought to pay off its many creditors, which are said to number in the thousands. BlockFi is estimated to owe up to $10 billion to more than 100,000 creditors, including considerable sums to its biggest debtors and the bankrupt cryptocurrency hedge fund Three Arrows Capital.

In the process of winding down BlockFi, the partnership with Coinbase is an important step that gives customers access to their cryptocurrency holdings. BlockFi wants to manage the fallout from its bankruptcy and properly pay its creditors, as its web platform is about to close. 

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