- BlockFi’s crypto asset distribution through Coinbase starts in July 2024, targeting creditors who missed April deadlines.
- Non-US BlockFi customers can’t receive funds due to regulatory requirements, impacting global asset distribution.
- FTX’s settlement includes $250M for BlockFi, with more funds contingent on FTX’s ability to repay its own customers.
BlockFi has announced that it will begin its first interim crypto asset distribution via Coinbase in July 2024. This process will involve asset allocation in batches over several months. Eligible customers will receive notifications through their BlockFi account email. However, due to regulatory requirements, non-US customers are unable to receive funds at this time.
Distribution Details
BlockFi’s first interim distribution will target creditors who did not cash out their funds by April 28, 2024, or submit Identity Verification requests by May 10, 2024. Funds will be distributed in two phases. The initial phase will cover creditors who meet these deadlines. Subsequent distributions will depend on settlements from the FTX estate later this year.
Starting in July 2024, eligible customers who missed previous deadlines will receive notifications about their funds. Coinbase will manage the distribution process. Distributions will occur weekly to monthly, depending on the creditor’s eligibility.
BlockFi will instruct Coinbase to distribute the crypto assets. Customers will receive automated emails from Coinbase confirming successful distributions. If a distribution fails, Coinbase will continue attempts until the requirements are met.
Background and Settlement
The relationship between BlockFi and FTX was close before the 2022 market crash. The crash exposed FTX’s misuse of customer funds. BlockFi provided loans to FTX’s hedge fund Alameda Research and sought rescue financing from FTX during the volatile summer of 2022.
In 2023, the two companies sued each other to recover loaned money before their bankruptcies in November 2022. Under a new settlement, FTX agreed to prioritize a $250 million payment to BlockFi. The remainder of the settlement depends on FTX’s efforts to repay its customers who are in bankruptcy.
FTX could pay BlockFi up to $689 million for Alameda loans, but only the first $250 million is guaranteed. Additionally, FTX agreed to pay BlockFi $185.3 million for funds BlockFi held in FTX trading accounts.
Future Repayments and Customer Impact
FTX aims to repay its customers fully, but this outcome is not guaranteed. BlockFi had previously agreed to repay FTX up to $275 million from a 2022 rescue loan, but only if it can repay its own customers first.
BlockFi has stated that customers with interest-bearing accounts are unlikely to receive full repayment. Estimates suggest these customers might receive between 39.4% and 100% of their account value.
As part of the agreement, BlockFi will drop its lawsuit over 56 million Robinhood shares allegedly pledged as collateral for loans to Alameda. The U.S. Department of Justice seized these shares when FTX founder Sam Bankman-Fried was arrested.
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
