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BlockFi Begins Asset Release Following Bankruptcy Resolution
Amidst its recovery from bankruptcy, BlockFi starts the asset release process, marking a significant step towards fulfilling its obligations to its users.
In a remarkable comeback, BlockFi, the embattled crypto lending platform, has announced its exit from bankruptcy and is gearing up to meet its obligations to creditors. This development surfaces almost a year after the platform felt the tremors of the cryptocurrency market's instability, a situation exacerbated by FTX's downfall. This means BlockFi is now in a position to start the recovery process of assets from indebted entities, notably Three Arrows Capital and FTX.
In a recent blog post dated Oct. 24, BlockFi confirmed that the majority of its Wallet clientele can now initiate withdrawals. They've provided detailed guidelines for Wallet users on how to access and retrieve their assets by logging into the BlockFi application.
Projected Repayments To Customers
BlockFi has offered projections on the expected payouts for its customers with Earn accounts that accrue interest. Account holders could potentially receive between 39.4% and the full amount of their account's value. It's crucial to highlight that while Wallet users have the green light for withdrawals, those with BIA and Loan accounts will need to exhibit patience before their repayments commence.
The firm has charted a repayment trajectory in line with its bankruptcy resolution procedures. Initial payouts for BIA and Loan account holders are projected for early 2024. Subsequent distributions are on the horizon, but the exact amounts will be influenced by several determinants, not least of which is BlockFi's ongoing involvement in FTX's bankruptcy legalities.
The Rise And Dip Of Crypto Lenders
During the pandemic, the crypto lending sector, frequently compared to traditional banking, saw a significant surge. These platforms lured retail users with the allure of high-interest rates for their cryptocurrency deposits. However, unlike their traditional counterparts, crypto lenders weren't bound by capital or liquidity norms, making them vulnerable when collateral deficits resulted in hefty losses for both users and the platforms. BlockFi thrived in this environment post-pandemic.
Yet, the tide turned in 2022 when Terra's stablecoin took a hit. In an attempt to salvage the situation, FTX extended a $400 million lifeline to BlockFi. This strategy faltered when FTX declared its own bankruptcy in November, dragging BlockFi into the quagmire.
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