As the May 15 deadline draws near, less than half of the non-U.S. customers of the bankrupt cryptocurrency lending firm BlockFi have stepped forward to reclaim their assets, according to a recent blog post issued by the company. This situation comes in the wake of BlockFi’s bankruptcy filing in November 2022, which was precipitated by the widespread contagion following the collapse of FTX, a significant player in the crypto market.
Since emerging from bankruptcy, BlockFi has made strides to rectify its financial standing and support its customers. In July 2024, the firm announced a comprehensive plan to distribute 100% of the dollar value of customer claims as they stood at the time of bankruptcy. Despite these efforts, a stark contrast in participation levels has surfaced: while 97% of U.S. customers have successfully claimed their distributions, only 43% of non-U.S. customers have done the same.
This discrepancy can be attributed, in part, to the complexities surrounding the distribution process for non-U.S. customers, which involved navigating the legal landscapes of both the United States and Bermuda. Additionally, there have been concerns among customers about the legitimacy of the communication from the BlockFi Estate. Many may mistakenly perceive requests for payment method selections as spam or phishing attempts, a trend that has raised alarm.
BlockFi has recognized these issues and stated, “BlockFi is doing all it can to make final distributions to all former customers.” In their efforts to streamline the reclamation process, customers who have yet to receive their distributions may need to complete a ‘Know Your Customer’ (KYC) identity verification to facilitate their claims. The firm encourages any outstanding claimants to finalize this verification process by the looming deadline of May 15, 2025.
It is important to note that prior to using BlockFi, both U.S. and non-U.S. customers were required to undergo KYC processes, which diminishes the likelihood of this verification being a significant barrier to distribution. The verification process itself is straightforward: requiring just two forms of identification and taking approximately ten minutes to complete. Once submitted, customers can expect their payments to be processed within 45 days.
According to bankruptcy laws, assets that remain unclaimed by the upcoming deadline will be distributed among unsecured creditors, lowering the chances of recovery for those who fail to take action. Therefore, it is imperative for all non-U.S. customers of BlockFi to address their claims promptly to secure their rightful assets.
