BlockFi to Liquidate Crypto Lending Platform, Over $1B on the Line in Litigation

Creditors will have until July 28, 2023 to vote on BlockFi’s restructuring plan should the court approve it

article-image

Artwork by Axel Rangel

share

BlockFi will liquidate its crypto lending platform in an effort to pay back creditors, according to a New Jersey bankruptcy court document filed Friday.

BlockFi was granted more time to formulate their bankruptcy plan in late April. The debtors associated with the bankrupt crypto lender filed their amended reorganization plan and disclosure statement on Friday; the deadline previously agreed upon.

On June 12, 2023, the court will determine which creditors that have repayment claims will be considered eligible to vote on BlockFi’s restructuring plan. Creditors vested with voting rights by the court will then have until July 28, 2023 to cast a ballot supporting or rejecting the plan. They also have the option to opt out entirely. Creditors include about 100,000 BlockFi customers.

In a letter to creditors, BlockFi’s lawyers stressed that asset recovery for their clients hinges on lawsuits against firms they claim defrauded them, including FTX, Alameda and Three Arrows Capital.

“The results of that litigation may achieve prospective high-end recoveries exceeding 90% for certain classes of claims,” BlockFi wrote in the letter. “Client recoveries will be increased or decreased massively (with total swings in client recoveries potentially exceeding $1 billion) depending on whether BlockFi can succeed in these litigations.”

This comes after a major win for BlockFi customers who had crypto in custodial, non-interest bearing accounts. A judge said around $300 million in digital assets could be returned to those customers. 

BlockFi froze transfers in early November last year, then declared bankruptcy on November 28, 2022. It was another firm caught in the collapse of FTX, and the unraveling process has been going on ever since.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates.png

Research

Pipe Network is a decentralized content delivery network (dCDN) that replaces the sparse, capital intensive data center footprint of traditional CDNs with a permissionless mesh of independent node operators. By orchestrating under-utilized resources that already exist at the edge, rather than purchasing or leasing thousands of servers, Pipe slashes capital intensity while letting supply expand autonomously in the places where bandwidth is scarcest and most expensive.

article-image

Fiscal dominance isn’t about interest rates and it isn’t about Trump, either

article-image

Firestarter Storage brings decentralized storage and delivery to Solana

article-image

After lengthy closing arguments on Wednesday, the case is now in the hands of 12 jurors

article-image

Analysts cite weak trading volume and regulatory progress as factors

article-image

Builders weigh in on Ethereum’s first decade and the decisions that will define its next one

article-image

Closing arguments set to kick off Wednesday after Tuesday’s testimony from two expert witnesses and an a16z partner