BlockFi Set to Pay Back Over $100,000 to California Users

Crypto lender BlockFi has agreed to refund its California customers over $100,000 for loan repayments made during a trading suspension last November.

The Department of Financial Protection and Innovation (DFPI) revealed that 111 customers in California had paid $103,471 to BlockFi’s service provider unnecessarily, as the lender failed to notify them that repayments were not required during its November bankruptcy.

BlockFi filed a motion to retrieve these funds from its servicer, and a decision will be made at a hearing on April 19th. The refunds processed so far are only a small part of the lender’s total liabilities, which could be as high as $10 billion.

While the refunds processed so far are just a fraction of BlockFi’s total liability between $1 billion and $10 billion, the crypto lender has begun reimbursing its customers. However, it remains uncertain when customers will have full access to their deposited funds, and some may be required to provide proof of claim by the end of March.

The DFPI has announced that BlockFi has consented to an “interim suspension” of its California Financing Law (CFL) license while bankruptcy proceedings are ongoing. Once the motion is approved, refunds will be granted.

BlockFi is expected to pay at least $1.3 billion to significant lenders such as the US SEC, FTX US, and Arkara Trust instead of its customers. BlockFi’s bankruptcy proceedings are ongoing, and it remains unclear when users will have full access to their deposited funds.

Image Credit: Shutterstock