BlockFi Enables Withdrawals After Overcoming Financial Turmoil

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The crypto lender BlockFi victoriously emerged from the ashes of bankruptcy. This turns a new leaf nearly eleven months after being engulfed in a financial storm after the collapse of FTX.

The prior bankruptcy filing by BlockFi in November last year spotlighted its loans to FTX’s sibling firm Alameda Research as a critical factor propelling it into a financial quagmire.

Crypto Lender BlockFi Exits Bankruptcy

With renewed vigor, BlockFi announced its strategic roadmap to implement actions delineated in its bankruptcy blueprint.

“BlockFi is pleased to announce that its bankruptcy plan (the “Plan”) is effective and the company has emerged from bankruptcy as of October 24, 2023 (the “Effective Date”),” the firm said.

A primary focus is clawing back assets it contends FTX and Three Arrows Capital rightfully owe. However, this endeavor likely faces a contentious path, as these firms are neck-deep in their individual bankruptcy dilemmas. For instance, FTX is debating whether to restart operations by mid-December.

Meanwhile, the waters remain turbulent. FTX’s co-founder, Sam Bankman-Fried, finds himself ensnared in a fraud trial, further intertwining the fate of these crypto behemoths.

BlockFi has reinstated withdrawal services for most of its Wallet customers, marking a significant stride towards normalcy. The repayment journey for those holding BlockFi Interest Accounts and Retail Loans has commenced. However, a cloud of uncertainty hovers over the exact repayment amounts, tethered to the unfolding bankruptcy scenario of FTX.

The saga unfolds in an environment where crypto lenders, dubbed as the crypto market’s banks, grew during the pandemic, luring retail customers with tantalizing double-digit rates against their crypto deposits.

Unlike traditional lending counterparts, these crypto entities are not mandated to maintain capital or liquidity buffers. This caveat left some grappling with a collateral shortfall, inflicting hefty losses on them and their clientele.

Read more: Identifying & Exploring Risk on DeFi Lending Protocols

The resurrection of BlockFi from bankruptcy is a narrative of resilience and a precursor to the potential asset recovery endeavors awaiting the crypto lending horizon.

Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content.



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