BlockFi Customers Could Recover Frozen Crypto Assets Through Liquidation Plan
If you are a customer of the failed crypto lender BlockFi, there may be some good news for you. A bankruptcy court judge has reportedly given the green light to the firm’s liquidation plan, which could allow customers to recoup a portion of their frozen crypto assets.
In November 2022, BlockFi stopped allowing its customers to make withdrawals due to a lack of clarity from FTX, one of its biggest borrowers. However, according to a recent report from Bloomberg, Judge Michael Kaplan has stated that he will approve the liquidation plan.
What Does the Liquidation Plan Entail?
The approved liquidation plan would see unsecured BlockFi creditors receiving around 35% to 63% of the funds they are owed. Additionally, some creditors may receive partial repayments in Bitcoin (BTC) and Ethereum (ETH).
However, it’s worth noting that the outcome of BlockFi’s legal battles against FTX and other bankrupt digital asset firms could potentially increase creditors’ recoveries by up to $1 billion.
Settlement Between BlockFi Management and Creditors’ Committee
Judge Kaplan approved the liquidation plan after a settlement was reached between BlockFi’s senior management and the creditors’ committee. The committee had accused the management of ignoring red flags from FTX.
The settlement aims to avoid administrative expenses that could reduce the amount that BlockFi customers would ultimately receive.
Expected Timeline for Repayments
The creditors’ committee hopes that repayments will begin sometime this year. This news provides some hope for customers who have been unable to access their funds for an extended period.
Hot Take: BlockFi Customers May Finally See Some Relief
After months of uncertainty, BlockFi customers may finally see some relief as the bankruptcy court judge approves the liquidation plan. While it’s not a full recovery, receiving a portion of their frozen crypto assets will be a welcome development for affected customers. The potential for increased recoveries through ongoing legal battles further adds to the optimism. It remains to be seen when the repayments will begin, but this news brings some much-needed hope to the situation.
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