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Bankrupt crypto lending platform BlockFi plans to offer refunds to California-based customers, according to reports from state regulators. March 27.
CALIFORNIA USERS RECEIVING REFUNDS
The California Department of Financial Protection and Innovation (DFPI) said eligible users could receive reimbursement of more than $100,000 after court approval.
During BlockFi’s bankruptcy last November, regulators said the company failed to notify customers in a timely manner that they no longer had to repay their loans. This caused California users to needlessly pay BlockFi’s servicers about $103,471.
BlockFi has previously filed a motion to have the servicer return those funds, but the issue will not be fully resolved until the April 19th hearing.
DPFI noted that the commissioner moved to suspend BlockFi’s lending license in November and then stopped shortly thereafter. It also moved to revoke its license in December. BlockFi today agreed to the relevant orders. This is because we were unable to update the customer in a timely manner.
BlockFi May Owe Creditors Billions of Dollars
BlockFi originally suspended customer withdrawals on November 11, 2022, around the time FTX collapsed. Filed for bankruptcy on November 28, 2022.
Today’s refund represents only a small portion of the total amount BlockFi owes its creditors. The company said in its early bankruptcy filing that it had between $1 billion and $10 billion in debt. At least $1.3 billion of that is owed not to individual users, but to large creditors such as Arkara Trust, FTX US and US SEC.
The company’s bankruptcy proceedings are still ongoing, and it’s still unclear when users will be able to regain access to the entirety of their deposited funds.
BlockFi took steps toward repaying users in December, but those actions only applied to certain funds.Currently, some customers may be required to submit proof of claimBlockFi will be accepted until the end of March.
