BlockFi Partners with Coinbase for Client Fund Distribution Amid Platform Shutdown

·

BlockFi, the once-prominent cryptocurrency lending platform, is finalizing its operational wind-down following bankruptcy proceedings triggered by the 2022 collapse of FTX. In a significant development for affected users, the company has announced a strategic partnership with Coinbase to facilitate the secure and structured withdrawal of client funds. This marks a critical step in BlockFi’s broader Chapter 11 bankruptcy resolution plan, aimed at returning assets to over 100,000 creditors.

The collaboration ensures that eligible clients—including holders of BlockFi Interest Accounts (BIA), retail loan customers, and private clients—can now access their cryptocurrency holdings through Coinbase’s trusted infrastructure. With the official closure of BlockFi’s web platform, this transition offers a vital pathway for users to reclaim their digital assets.

👉 Discover how to securely access your crypto assets during platform transitions.

Timeline of BlockFi’s Wind-Down and Key Milestones

BlockFi first declared bankruptcy in November 2022, shortly after the dramatic fall of Sam Bankman-Fried’s FTX empire. The firm had significant exposure to FTX and its sister trading entity, Alameda Research, which contributed heavily to its financial instability. After months of legal proceedings and asset evaluation, BlockFi’s Chapter 11 reorganization plan was approved by the court in September 2023.

This plan outlines the repayment of up to $10 billion** in liabilities owed to more than **100,000 creditors** worldwide. Among the largest claims were approximately **$1 billion held by just three creditors and $220 million owed to the now-defunct hedge fund Three Arrows Capital.

A key deadline was set for April 28, 2024, by which clients were required to submit withdrawal requests. Those who met the deadline received detailed instructions on setting up or linking a Coinbase account—either existing or newly created—to receive their distributed funds.

For users who missed the initial cutoff, BlockFi extended a final verification window until May 10, 2024, allowing latecomers one last opportunity to authenticate their identity and establish an approved Coinbase wallet. Users failing to complete this process risk having their remaining crypto holdings liquidated into fiat currency, with proceeds distributed according to the bankruptcy court’s guidelines.

Coinbase as Exclusive Distribution Partner

In a clear move to ensure transparency and security, BlockFi has designated Coinbase as its sole partner for all future cryptocurrency distributions. The company has emphasized that no other platforms will be used, urging clients to remain cautious of third-party services claiming to offer alternative withdrawal methods.

“BlockFi is pleased to announce Coinbase as our distribution partner to ensure continuity of crypto withdrawals available to our eligible BlockFi Interest Account (BIA), Retail Loan, and Private clients.”
— BlockFi Official Statement, May 9, 2024

This exclusive arrangement minimizes the risk of fraud and streamlines the distribution logistics during a complex financial restructuring. It also reinforces Coinbase’s growing role as a trusted custodian and on-ramp for institutional-grade crypto asset management.

Clients are advised to only interact with official communications from BlockFi and avoid responding to unsolicited emails or messages promising immediate access to funds—especially those requesting personal credentials or payment.

$875 Million Settlement with FTX and Alameda Estates

One of the most impactful developments in BlockFi’s recovery effort is the $875 million in-principle settlement** reached in March 2024 with the estates of **FTX** and **Alameda Research**. This agreement resolves BlockFi’s claims totaling around **$1 billion while simultaneously waiving millions in potential avoidance claims and counterclaims filed by FTX against BlockFi.

The settlement represents a major milestone in recouping value for creditors and reflects ongoing efforts by bankruptcy trustees to maximize recoveries across the fragmented crypto landscape post-FTX collapse.

Zac Prince, BlockFi’s CEO, played a notable role in the legal aftermath, testifying as a government witness during Sam Bankman-Fried’s criminal trial. He underscored that FTX’s mismanagement and misuse of customer funds were direct catalysts for BlockFi’s downfall, reinforcing calls for stronger regulatory oversight in the digital asset space.

👉 Learn how industry leaders are navigating post-bankruptcy crypto recovery.

Protecting Clients from Fraud and Scams

As with any large-scale financial transition, the risk of phishing and impersonation scams has increased. BlockFi has actively warned clients about fraudulent emails mimicking official announcements, particularly those falsely claiming that immediate withdrawals are available outside the Coinbase integration process.

To stay protected, users should:

The company continues to work closely with cybersecurity teams and legal authorities to monitor and disrupt malicious activity targeting former customers.

What’s Next for Affected Users?

While BlockFi’s platform operations have officially ended, the asset distribution process is expected to continue in phases. Future rounds may include additional recoveries from ongoing litigation and asset liquidations tied to the FTX estate.

Eligible clients should remain vigilant and responsive to official communications. Even after successful enrollment with Coinbase, some distributions may occur over time depending on liquidity and court-approved disbursement schedules.

For those still navigating the process, support resources remain available through BlockFi’s claims portal—though all customer service functions related to trading or account management have been discontinued.

Frequently Asked Questions (FAQ)

Q: Why did BlockFi shut down?
A: BlockFi filed for Chapter 11 bankruptcy in November 2022 due to massive financial losses linked to its exposure to FTX and Alameda Research. Regulatory pressures and market volatility further accelerated its collapse.

Q: Can I still withdraw my funds if I missed the April 28 deadline?
A: A limited extension was available until May 10, 2024, for identity verification and Coinbase account setup. If you missed both deadlines, your assets may be converted to cash and distributed later based on court procedures.

Q: Is Coinbase charging fees for receiving BlockFi distributions?
A: Coinbase does not charge deposit fees for receiving cryptocurrency. However, standard network transaction fees may apply depending on blockchain activity at the time of transfer.

Q: How will I know if I’m eligible for distribution?
A: Eligibility is determined by your account status as of BlockFi’s bankruptcy filing date. Official notifications were sent via email to verified users outlining next steps.

Q: Will all creditors receive full repayment?
A: Full repayment is unlikely given the scale of liabilities. Recoveries depend on asset liquidation outcomes and settlements like the $875 million deal with FTX. Distributions will follow court-approved priority rankings.

Q: What should I do if I receive a suspicious email about my BlockFi account?
A: Do not respond or click any links. Report it immediately to BlockFi’s official support channel and delete the message. Legitimate communications will never ask for passwords or private keys.

👉 Stay ahead of crypto industry shifts with real-time market insights.

Core Keywords

As the crypto lending sector continues to evolve under heightened scrutiny, BlockFi’s case serves as a cautionary tale—and a roadmap—for managing insolvency in decentralized finance. While the platform’s closure marks the end of an era, the coordinated effort with Coinbase offers a model for responsible user protection during turbulent market cycles.