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When a loan hits its maturity date, BlockFi says borrowers should also not make any payment and outstanding loans are not being reported as delinquent to any credit bureaus.
Last updated
When a loan hits its maturity date, BlockFi says borrowers should also not make any payment and outstanding loans are not being reported as delinquent to any credit bureaus.
Last updated
Unfortunately, not all BlockFi clients were able to withdraw in the early stages at least, as many are deemed by the company to be not “eligible.” In mid-August BlockFi advised a broad range of account holders that they will not be able to withdraw funds yet, as they are not US residents.
In addition, the company said account holders who were able to extract more than $7,575 from their accounts between November the 2nd and November the 10th 2022, can also not withdraw.
This is the period where the company looked shaky but had not stopped withdrawals. BlockFi says as authorized by the bankruptcy court in the Wallet Order, the following clients are eligible for withdrawals -U.S.-based BlockFi Wallet account holders who:
1. Did not withdraw or transfer more than $7,575 worth of digital assets from their BlockFi Interest Account (BIA) or BlockFi Private Client (BPC) on or after November 2, 2022; 2. Did not hold any trade-only assets in their Wallet at the time of Platform Pause on November 10, 2022, at 8:15 P.M. E.T.
BlockFi says that it expects “additional clients, including BlockFi International clients”, will become eligible for withdrawals.
So how much will account holders receive? In an email to account holders on August 3rd, BlockFi advised that most people will receive 50% of their balances back.
The email stated that BlockFi wants to class all its account holders with balances of between $10 and $3000 as “convenience” claims – stating;
Convenience Claim Class: All creditors with claims between $10 – $3,000 will be included in a “Convenience Class.” Creditors in the Convenience Class will receive a one-time distribution of 50% of their claim in cash. Certain creditors whose claims exceed $3,000 will also have the option to elect to have their claim amount reduced to $3,000 and treated as a Convenience Claim.
With questions or for additional information about the Plan or how to vote, creditors can visit the Kroll website. Creditors can also contact Kroll by email at blockfiinfo@ra.kroll.com.
BlockFi is warning that it expects a marked increase in phishing scams targeting its account holders. This warning came into stark focus on August 25th when BlockFi revealed that its claims administration platform vendors, Kroll, had been hacked and BlockFi client data housed on its platform had been accessed.
The company says BlockFi’s internal systems and client funds were not impacted. Although BlockFi says no action is needed on client’s accounts, it warns that similar incidents have impacted other crypto platforms in bankruptcy recently. “In the following weeks, you should expect an uptick in phishing attempts and spam phone calls. As we get closer to opening withdrawals for certain BlockFi clients in accordance with the Wallet Order [Docket No. 923] entered by the Court, we urge you to remain vigilant as we anticipate an increase in phishing emails and scams.”
The company warns that scammers may attempt to connect on social media platforms pretending to be BlockFi or a BlockFi team member. It says legitimate contact from BlockFi will only come through its official BlockFi channels (e.g., @BlockFi on Twitter or through the BlockFi app) or via its claims agent, Kroll (BlockfiBankruptcyNoticing@noticing.ra.kroll.com).
To ensure user accounts remain protected, BlockFi says it will never ask for passwords or personal identification over social media and it also encourages account holders to take the following security steps:
Two-Factor Authentication: Ensure your two-factor authentication, or 2FA, is enabled on your BlockFi account. To turn on 2FA, please log in to your BlockFi account through the web app and visit the Security page within your Profile Settings. Under ‘Two-Factor Authentication,’ click ‘Enable 2FA’ and follow the instructions to set up your 2FA via the Authenticator app. For instructions on how to reset your 2FA, click here.
Turn on Allowlisting for BlockFi: Allowlisting is a security feature which, when enabled, only allows you to withdraw from your BlockFi account to addresses that have been saved in your Wallet Address Book. We recommend all clients take this action as it significantly reduces the risk of impact to your account by a bad actor. You can find instructions on how to turn on Allowlisting here
The update follows the news that Block-Fi has settled with its management team over the crypto lender’s collapse – freeing the way for it to pursue funds from the FTX and Three-Arrows Capital bankruptcies.
The crypto lender said its management team had no reason to doubt FTX’s officers before the exchange melted down amid allegations of fraud last year.
The findings of the seven-month investigation were made public Monday in a New Jersey bankruptcy court to support a BlockFi settlement that would resolve potential legal claims related to the crypto lenders’ collapse against its co-founders Zac Prince and Flori Marquez, as well as other company officers.
In exchange, the management team has agreed to assist company lawyers in potentially lucrative actions against firms they blame for BlockFi’s collapse including FTX and failed crypto hedge-fund Three Arrows Capital.
BlockFi management will serve as key witnesses in pending litigation involving FTX and Three Arrows, the outcome of which could result in $1 billion in value for creditors, the failed crypto lender said.
The move follows recent Court orders in New Jersey and Bermuda, which saw BlockFi update its clients and creditors about a potential funds return for frozen account holders.
BlockFi says account holders should be able to withdraw funds from their locked accounts in Q4 2023. The news follows an order from the United States Bankruptcy Court for the District of New Jersey and a similar order from a court in Bermuda (where its subsidiary BlockFi International Ltd is registered). The orders confirm the following;
That BlockFi’s clients (not BlockFi) own the assets in their BlockFi Wallet accounts;
That BlockFi may proceed with updating its user interface to reflect transactions and client account balances as of the date and time it ceased operating (November 10, 2022, at 8:15 P.M. );
That the withdrawal of assets not subject to potential preference claims from BlockFi Wallet accounts could begin.
The company says that to proceed with these withdrawals “accurately and safely” it will need to update its user interface to reflect account balances at the time of what it refers to as its “Platform Pause”, in addition to building new functionality into its system. “We anticipate that this work and the necessary testing will be completed this summer. At that time, we will be in a position to begin allowing clients to withdraw digital assets held in BlockFi Wallet accounts that are not subject to potential preference claims.”
BlockFi says all funds will not be available to be withdrawn at once, instead BlockFi Wallet account withdrawals will be done in batches and clients will be notified by email when it is their turn to withdraw their assets. US residents will be prioritized. The company says customers will only be able to withdraw the crypto assets they have – and cannot request a cash withdrawal equivalent. Customers must have created an external crypto wallet capable of receiving the withdrawal before any funds can be returned.
In a January 30th hearing, BlockFi’s proposal for its claims process was approved by the Court and the company also received interim approval to redact its clients’ names and other personal information from its declared Schedule of Assets and Liabilities.
