BlockFi taps Coinbase for withdrawals amid platform shutdown

Bankrupt cryptocurrency lender BlockFi has teamed up with Coinbase to enable cryptocurrency withdrawals for eligible clients as it gets ready to shut down its web platform.

The partnership is part of BlockFi’s efforts to manage its operations after filing for Chapter 11 bankruptcy in late 2022.

The firm stated, “BlockFi is pleased to announce that we have engaged Coinbase as our distribution partner to ensure continuity of crypto withdrawals available to our eligible BlockFi Interest Account (BIA), Retail Loan, and Private Clients.” This partnership will provide an avenue for clients who missed the initial withdrawal window to access their funds.

BlockFi’s web platform is scheduled to close later this month. Clients who did not meet the April 28 withdrawal deadline or the May 10 verification deadline will need to have an approved Coinbase account to withdraw their crypto assets. Those without a verified Coinbase account by the deadline will have their assets converted to cash and distributed as per the approved plan.

Based in Jersey City, New Jersey, BlockFi’s next move is to chase additional payments via the bankruptcy proceedings of other crypto businesses. The company will prioritize its efforts on retrieving funds from its major debtors such as Alameda Research, FTX, Three Arrows Capital, Emergent, Marex, and Core Scientific.

BlockFi already reached an in-principle settlement of $875 million with the FTX and Alameda Research estates.

One of the key factors leading to BlockFi’s bankruptcy in November 2022 was its loans to FTX’s hedge fund, Alameda Research. Despite the challenges, BlockFi allowed its Wallet customers to withdraw their funds in October 2023. However, those holding BlockFi Interest Accounts and Retail Loans had to wait for a few more months to be repaid. The final repayment amount, however, might hinge on the outcome of FTX’s bankruptcy case.