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

Unlocked by Template (11).png

Research

Union’s technical design brings measured improvements to crosschain interoperability. By combining a consensus-verified hub with novel constructs like state lenses and ZK proofs for client updates, Union achieves an interoperability protocol that is highly performant, trust-minimized, and scalable.

article-image

FOMC July minutes may hold the key to Powell’s speech tomorrow

article-image

Singapore’s largest bank is issuing crypto-linked structured notes on Ethereum, but the tokens will remain permissioned

article-image

Jupiter borrows Fluid’s innovative risk engine

article-image

Exchange says all validators now run in distributed clusters, boosting decentralization and fault tolerance

article-image

Retail FOMO is back, with CEX onboarding and search terms up