BlockFi has announced its decision to shut down operations and transfer asset management responsibilities to Coinbase, the leading U.S. crypto exchange. This strategic move comes after BlockFi faced financial hardships, leading to its bankruptcy declaration at the end of 2022. To facilitate a seamless transition, BlockFi has already begun notifying its customers about the required steps to move their assets to Coinbase.
Customers have been given deadlines until April 28, 2024, to initiate the transfer of their assets, with a final date for completing identity verification set for May 10, 2024. Those failing to meet these deadlines will have their asset transfer and verification processes handled directly through Coinbase, ensuring that no customer assets are left unmanaged.
BlockFi secures crucial funds in FTX settlement
As part of its financial restructuring, BlockFi has secured a significant settlement from FTX, totaling $250 million as an initial payment. This settlement is part of a larger agreement amounting to $874 million and aims to compensate BlockFi for previous exposures to FTX and loans made to Alameda Research. The agreement positions BlockFi as a senior secured lender in the revised debt repayment plan proposed by FTX.
This financial infusion is critical as it helps stabilize BlockFi’s operations by providing necessary liquidity and facilitating the repayment of obligations to its stakeholders. The settlement is a pivotal component of FTX’s strategy to address and resolve claims from various creditors, including BlockFi, which was one of the largest affected by FTX’s bankruptcy last November.
Implications for clients and the crypto market
The closure of BlockFi and its integration with Coinbase marks a new chapter for both entities and their clients. This collaboration signifies a strategic alignment between two major crypto players and enhances the stability and service delivery to BlockFi’s clientele during its financial recuperation phase.
Coinbase will now handle the distribution of assets, ensuring that all customer assets are securely managed as BlockFi winds down its operations. This move is expected to bolster confidence in the continuity of service and the protection of client assets amidst the ongoing adjustments in the crypto lending market.