BlockFi to shut down web platform, turn to Coinbase as distribution partner

Bankrupt crypto lender BlockFi said on May 9 that it would shut down its web platform by the end of May and rely primarily on Coinbase as a distribution partner.

The change ensures that BlockFi Interest Account (BIA), Retail Loan, and Private Clients can continue to access withdrawals as part of the bankruptcy claims process.

Crypto-eligible customers will be able to access funds in kind if they have an open or approved Coinbase account. The condition applies to crypto-eligible customers who did not withdraw crypto from BlockFi’s web platform by April 28 or did not verify their identity by May 10.

Crypto-eligible customers who do not create a Coinbase account or cannot create one will instead receive funds in cash.

BlockFi emphasized that it has not partnered with any other crypto companies for distributions and warned users of scams from bad actors claiming otherwise.

BlockFi and Coinbase will contact users who are on file with instructions.

BlockFi’s FTX funds

The plan administrator in BlockFi’s bankruptcy case may perform future distributions through Coinbase, including those related to funds recovered from FTX.

BlockFi was expected to receive nearly $875 million from FTX as of March. Only the first $250 million is prioritized, while the remainder depends on FTX’s ability to pay customers in its own case.

BlockFi said that, without Coinbase’s involvement, the plan administrator would only be able to make cash distributions rather than crypto distributions going forward.

BlockFi originally filed for halted withdrawals on Nov. 10, 2022, citing a “lack of clarity” around FTX’s separate bankruptcy as the reason for its own shutdown. Weeks later, BlockFi entered bankruptcy proceedings that revealed FTX as its second-largest creditor.

BlockFi emerged from bankruptcy in October 2023 and began to pay users this year. FTX remains in bankruptcy proceedings.

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