BlockFi to begin processing crypto distributions via Coinbase this month

Defunct centralized crypto lender BlockFi has confirmed it will commence initial crypto distributions via Coinbase in July.

The distributions will be processed in batches over the coming months, with eligible clients receiving a notification to their registered email address, BlockFi posted to X on Wednesday. However, “non-U.S. clients are unable to receive funds at this time due to the regulatory requirements applicable to them,” the firm noted.

“The Plan Administrator has been working tirelessly with the Joint Liquidators of BlockFi International to implement a distribution process for non-U.S. clients that complies with Bermuda regulation. Until all relevant stakeholders confirm that those requirements have been met, no further funds are approved for distribution to non-U.S. clients,” Coinbase states on its website.

BlockFi and Coinbase previously agreed to a one-year distribution window, beginning after the first asset distribution to creditors.

BlockFi shuts down web platform

The commencement of distributions follows an announcement in May that eligible BlockFi clients could still access crypto withdrawals via Coinbase after BlockFi shut down its web platform.

It meant those clients wouldn’t have their assets immediately converted to cash and could withdraw their crypto if they had an approved Coinbase account.

BlockFi clients’ fiat claims are not being processed by Coinbase. Eligible cash distributions are instead handled by Kroll and its payment processing partner, Digital Disbursements.

The plan administrator for BlockFi will continue to use Coinbase for future distributions — including any recoveries from the FTX and Alameda Research estates from which it reached an $875 million in-principle settlement.

BlockFi’s demise

BlockFi initially paused customer withdrawals in November 2022, filing for Chapter 11 bankruptcy protection shortly after. In September 2023, the bankruptcy court approved BlockFi’s plan to repay its 10,000 creditors.

BlockFi, as a centralized lender, provided interest-yielding deposit accounts and functioned similarly to a bank by loaning out user deposits to crypto industry clients.

The sector suffered significant setbacks after a tumultuous 2022 for centralized crypto lending services, seeing the bankruptcy of several firms, including Celsius, Voyager Digital and Genesis, following the collapse of the Terra ecosystem, FTX, and 3AC.