BlockFi Bankruptcy Plan Is Effective And Emerged From Bankruptcy

Key Points:

• BlockFi has emerged from bankruptcy and is beginning to implement the BlockFi bankruptcy plan.
• BlockFi faces challenges recovering assets from FTX and other entities in the BlockFi Bankruptcy Plan.
• Cryptocurrency lending platforms are not required to maintain capital or liquidity reserves, which makes them more vulnerable to financial shocks.

BlockFi is announcing that BlockFi bankruptcy plan is effective and that the company has emerged from bankruptcy as of October 24, 2023.

BlockFi Bankruptcy Plan Targets FTX, Other Entities for Asset Recovery

A year ago, in November, BlockFi bankruptcy plan identified its loans to Alameda, FTX’s sister company, as a key factor in its serious situation. BlockFi has officially started implementing the steps in its bankruptcy plan, which include trying to recover assets it believes are owed to it by entities such as FTX, Three Arrows Capital, and others.

However, it’s expected to face significant challenges trying to recover these assets as these entities also navigate bankruptcy proceedings. It’s also worth mentioning that FTX co-founder Sam Bankman-Fried is currently involved in a legal case concerning allegations of fraud.

BlockFi Withdrawals and Reimbursements Underway, but Amounts Uncertain

BlockFi has announced that most of its Wallet customers can now withdraw. In the meantime, those with BlockFi interest accounts and retail loans can look forward to reimbursements over the next few months. But the actual amounts they get could change depending on the outcome of the FTX bankruptcy proceedings, as per BlockFi.

These cryptocurrency lending platforms, often considered the unofficial banks of the crypto world, saw impressive growth during the pandemic. They lured retail customers with the promise of high double-digit interest rates in return for their cryptocurrency deposits. However, unlike traditional banks, these platforms are not required to maintain capital or liquidity reserves. This left them and their customers exposed when a collateral shortage led to significant losses.

Coincu will continue to update the situation related to Sam Bankman-Fried, you can find out more information through this article.

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