BlockFi, a crypto lending platform, has successfully emerged from a challenging period and is now set to fulfill its obligations to creditors. The platform has announced its intent to gradually wind down operations and return crypto assets to its customers, marking the end of a tumultuous 11-month period that began with the collapse of FTX. BlockFi is now in a position to recover assets from entities like Three Arrows Capital (3AC) and FTX.
As of October 24, BlockFi has allowed withdrawals for the majority of its Wallet customers, with specific instructions provided for accessing assets. Customers can initiate withdrawals by logging into the BlockFi app and submitting requests.
Estimates for repayments have been provided for customers with interest-bearing Earn accounts, ranging from 39.4% to 100% of their total holdings. However, BIA and loan customers will need to wait for their repayments, with an outlined plan aligning with bankruptcy proceedings, starting in early 2024.
The crypto lending industry, often considered analogous to traditional banks in the crypto space, saw significant growth during the pandemic, attracting retail customers with high interest rates in exchange for crypto deposits.
However, these platforms lacked the regulatory safeguards of traditional banks, leaving them vulnerable to collateral shortages and losses. BlockFi, which initially benefited from this trend, faced challenges in 2022 when Terra’s stablecoin collapsed.
An attempt to rescue BlockFi with a $400 million credit line from FTX backfired when FTX itself declared bankruptcy, impacting BlockFi.
Image Credit: Shutterstock
Keep in mind that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. We try our best to keep things fair and balanced, in order to help you make the best choice for you.
