The company agreed to the license revocation and committed to discontinuing unsafe practices. DFPI reported that the company violated the California Financing Law (CFL). BlockFi gave loans without considering borrowers’ repayment capacity and charged interest before the loans were disbursed. Additionally, the company failed to provide credit counseling and did not meet credit reporting obligations.

DFPI Commissioner Clothilde Hewlett said, “While we encourage innovation in our financial markets, companies must comply with laws and protect consumers to continue operating.”

The bankrupt company will pay a $175,000 fine imposed by California, but the payment has been postponed to prioritize consumer repayments. In May 2024, the company shut down its web platform, and customers can no longer access it.

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The bankruptcy process began after Sam Bankman-Fried‘s FTX exchange collapsed. The company had significant exposure to FTX and its affiliates. BlockFi filed for bankruptcy due to a $400 million credit line with FTX US. Additionally, FTX was one of BlockFi‘s largest unsecured creditors.

By 2024, the company is estimated to owe up to $10 billion to more than 100,000 creditors.

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The post California Revokes Crypto Lending Company BlockFi’s License appeared first on Coin Engineer.

Due to loans granted to Alameda, a division of another bankrupt cryptocurrency startup, FTX, BlockFi filed for bankruptcy in November 2022. Those qualified to get bitcoin payments will be notified by email upon opening a Coinbase account. Current Coinbase users have to finish KYC verification.

Users of a Coinbase account will be paid USDT, Ethereum (ETH), and Bitcoin (BTC). Payments for those without a Coinbase account will come in cash.

Because of BTC sold by the German government, Bitcoin was under strong selling pressure from June 19 to July 12. Although the price dropped to $55,000 during this period, BTC recovered since Germany lacked residual coins to sell.

Users who were eligible but did not take their money out by April 28 or did not confirm their identity by May 10 will also be paid. BlockFi’s release states that reimbursements will be given only to US consumers.

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The post BlockFi to Begin Crypto Payments via Coinbase appeared first on Coin Engineer.

According to a blog post by the company, “eligible BlockFi Interest Accounts (BIA), retail loans, and private clients” would be able to withdraw their funds with the help of their partnership with Coinbase.

BlockFi was rendered bankrupt following the collapse of FTX in November 2022. By 2023, the company was closed, the recovery plan for the customers’ cryptocurrencies was announced, and the date for withdrawal requests was set for April 28, 2024.

On Thursday, May 9, the lender released a statement to clients stating that the deadline for withdrawals of digital assets from the current estate distribution had expired. For the withdrawal to be convenient, they will be provided with a guide on how to create a Coinbase account, whether they are already users or not.

In case you could not verify your identity by the May 10th withdrawal deadline, you are being provided with another opportunity to do it via the BlockFi platform. Assets could be liquidated and given to clients who cannot open an authorized Coinbase account.

BlockFi CEO Blames Bankman-Fried for Company’s Bankruptcy

Coinbase is the platform where the plan administrator takes the recovered FTX monies for future payout rounds.

BlockFi is explicit that it is not going to work with other platforms that distribute cryptocurrencies. Hence, investors should be careful not to be swayed by third-party fraudsters.

Before, BlockFi was a victim of fraud. The victims were sent phishing emails that appeared to be official company communication, offering them immediate withdrawal of the amount remaining.

During March, BlockFi and the estates of FTX and Alameda Research came to a provisional settlement of $875 million. The over $1 billion in claims that BlockFi had against FTX were settled in the settlement, and in addition, FTX also agreed to not pursue “millions of dollars of avoidance claims and other counterclaims” that BlockFi had against them.

In the criminal case of Sam Bankman-Fried, CEO of BlockFi Zac Prince said that the acts of the founder of FTX led directly to the bankruptcy of BlockFi.

The bankruptcy court allowed the Chapter 11 repayment plan to reach 10,000 of BlockFi’s creditors in September 2023. BlockFi’s more than 100,000 claim to the company’s assets, including the collapsed cryptocurrency hedge fund Three Arrows Capital, is owed $220 million, and the top three creditors are each owed $1 billion.

The post Bankrupt BlockFi Shuts Down, Partners with Coinbase appeared first on Coin Engineer.

Under the terms of the settlement, BlockFi stands to receive $874.5 million in claims against FTX and Alameda Research. Notably, $250 million will be designated as a secured claim, prioritizing BlockFi’s repayment following FTX’s anticipated exit from bankruptcy, contingent upon approval from creditors.

In exchange, FTX will withdraw its claims against BlockFi, facilitating the payout of BlockFi’s remaining claims in alignment with FTX’s restructuring plan. However, final approval from a judge is still pending.

Kenneth Aulet, a partner at Brown Rudnick representing the Committee of Unsecured Creditors, expressed satisfaction with the outcome, emphasizing the protection of BlockFi’s claims against FTX and the resolution of potential clawback claims. This agreement is hailed as a boon for BlockFi’s customers and creditors alike.

The relationship between FTX, Alameda, and BlockFi has been intricate and interconnected. BlockFi had secured a $400 million credit line from FTX, while FTX, operating as West Realm Shires, emerged as one of BlockFi’s primary creditors with a $275 million claim.

The negotiated settlement is hailed as a significant victory for BlockFi and its customers, surpassing initial expectations outlined in the bankruptcy plan. Crucially, it reallocates resources earmarked for potential litigation with FTX towards customer distributions, ensuring a more favorable outcome for all parties involved.

The post BlockFi Settles With FTX, Alameda Estates for $874.5M appeared first on Coin Engineer.

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The settlement, which resolves the dispute between crypto lender BlockFi and the liquidated crypto hedge fund 3AC, was approved by Michael Kaplan, a judge in the New Jersey Bankruptcy Court. Kaplan approved the deal to prevent further legal battles between the companies, as BlockFi claimed 3AC owed it $129 million, while 3AC argued BlockFi owed them $280 million.

Kaplan declined to disclose the details of the settlement, rejecting the objection to the seal, stating that the terms should remain confidential as the US Trustee failed to justify the need for the debtors to enter into the settlement.

However, BlockFi requested that certain information be redacted, arguing that it was commercially sensitive and could affect its ongoing lawsuit against the bankrupt crypto exchange FTX.

The court granted the sealing request, citing the need to protect settlement strategies and show deference to comity in 3AC’s foreign bankruptcy proceedings.

Approval by Michael Kaplan (BlockFi)

This approval allows BlockFi to proceed with distributions from its creditors to its creditors, which was a key reason for the expedited approval request. Judge Kaplan approved BlockFi’s amended Chapter 11 plan and customer repayment plan, which the company filed for liquidation in September 2023. According to estimates at the time, BlockFi owed up to $10 billion to over 100,000 creditors. Of this debt, $1 billion was owed to its three largest creditors and $220 million to 3AC.

Three Arrows Capital collapsed in June 2022, and BlockFi filed for bankruptcy in late November 2022 following the fall of FTX. In early February, OPNX, a crypto bankruptcy claims platform launched by 3AC co-founders Su Zhu and Kyle Davies, announced that it would officially cease all operations and close by February 14th.

The post BlockFi and Three Arrows Capital (3AC) Reach Settlement! appeared first on Coin Engineer.