1. What did BlockFi announce?
BlockFi today initiated a process to stabilize its business and provide the company with the opportunity to consummate a reorganization that maximizes value for all stakeholders. You will be able to find the official announcement here.
To implement the restructuring, BlockFi filed a voluntary petition for relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of New Jersey.
2. What is Chapter 11?
Chapter 11 is a process in the U.S. through which companies restructure their obligations while operations continue.
3. Why did BlockFi choose to file Chapter 11 bankruptcy?
BlockFi’s chapter 11 cases will enable BlockFi to stabilize its business and provide BlockFi with the opportunity to consummate a reorganization that maximizes value for all stakeholders.
This action follows the shocking events surrounding FTX and associated corporate entities (“FTX”) and the difficult but necessary decision we made as a result to pause most activities on our platform.
The court-supervised restructuring process is transparent and encourages dialogue between all stakeholders.
4. Does BlockFi hold 100% of client deposits on FTX?
The rumors that a majority of BlockFi assets are held at FTX are false. However, as shared, we do have significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX.US.
5. What impact does FTX’s Chapter 11 have on BlockFi?
We were shocked by the news regarding FTX and Alameda. We, like the rest of the world, found out about this situation through Twitter. Given the lack of clarity on the status of FTX.com, FTX.US, and Alameda, we are not able to operate business as usual.
While we will continue to work on recovering all obligations owed to BlockFi, we expect that the recovery of the obligations owed to us by FTX will be delayed as FTX works through its own bankruptcy process. Our priority has been and will continue to be to protect our clients and their interests.
You can find additional information about FTX’s chapter 11 cases at https://cases.ra.kroll.com/FTX/.
6. What does this mean for clients?
Acting in the best interest of our clients is our top priority and continues to guide our path forward. We will continue to communicate with our clients through the process to ensure they hear directly from us.
We are not requesting authority to restore platform activity at this time. We currently anticipate that clients’ claims will be addressed through the chapter 11 process.
7. Can clients withdraw assets from their BlockFi Wallets?
Not yet. Platform activity is currently paused. BlockFi has filed a motion requesting authority from the U.S. Bankruptcy Court to allow clients to withdraw digital assets that are held in their BlockFi Wallet Accounts. We will be seeking similar relief from the Supreme Court of Bermuda with respect to BlockFi Wallet Accounts held at BlockFi International Ltd. This motion would not impact withdrawals or transfers from BlockFi Interest Accounts, which remain paused at this time. You can find more information in this blog.
We are looking forward to discussing this motion with the U.S. Bankruptcy Court and key parties in our cases, and expeditiously moving towards a resolution that returns client assets. We expect that our request will be heard by the U.S. Bankruptcy Court at our hearing currently scheduled for January 9, 2023, at 10:00am ET. We expect that our request for similar relief with respect to BlockFi International Ltd. will be first heard by the Supreme Court of Bermuda at our hearing currently scheduled for January 13, 2023 at 10.30am AST and then listed for a fuller hearing on a date to be fixed by the Court. We will update you after that first hearing in Bermuda.
8. Do the balances on the user interface accurately reflect balances at the time of the platform pause?
For certain clients, as outlined in the Wallet Motion, balances displayed on the user interface may not properly reflect underlying balances at the time of the platform pause, as it took BlockFi a period of time following the platform pause to fully disable the transactional request functionality of BlockFi’s client-facing user interface. Attempted transactions during this time period did not actually take place.
We expect that account balances are up-to-date for clients who did not enter transaction requests during the time following the platform pause.
Additional information regarding our chapter 11 cases, including court documents and claim information, can be found by visiting BlockFi’s claims agent Kroll at https://restructuring.ra.kroll.com/blockfi. Clients with questions about the process may call Kroll at (888) 773-0375 (Toll Free) or (646) 440-4371 (International), or email blockfiinfo@ra.kroll.com.
9. Should I delete my BlockFi app or account?
We encourage clients to maintain their BlockFi app and account at this time.
At this time, withdrawals from BlockFi continue to be paused. We also continue to ask clients not to submit any deposits to BlockFi Wallet or Interest Accounts.
10. When will BlockFi complete the restructuring process?
BlockFi is seeking to restructure and exit chapter 11 pursuant to a chapter 11 plan as promptly as practicable. The ultimate timing of a chapter 11 case can vary, and depends on several unknowns. We respect the Chapter 11 process and are committed to transparency and open dialogue with all stakeholders.
11. How will I be kept informed about the progress of the bankruptcy?
We are committed to keeping stakeholders informed throughout this process and will also continue to provide updates to our clients through official BlockFi channels, including Twitter and our blog. While we intend to communicate as frequently as possible going forward, we anticipate that this will be less frequent than what our clients and other stakeholders are used to.
Additional information regarding our chapter 11 cases, including court documents and claim information, can be found by visiting BlockFi’s claims agent Kroll at https://restructuring.ra.kroll.com/blockfi. Clients with questions about the process may call Kroll at (888) 773-0375 (Toll Free) or (646) 440-4371 (International), or email blockfiinfo@ra.kroll.com.
12. What is BlockFi doing to protect my information and crypto assets?
Data and asset security remain a top priority for all at BlockFi. We are taking proactive steps to secure both platform assets and information.
13. I have additional questions about the filing. How can I obtain more information?
Additional information regarding our chapter 11 cases, including court documents and claim information, can be found by visiting BlockFi’s claims agent Kroll at https://restructuring.ra.kroll.com/blockfi. Clients with questions about the process may call Kroll at (888) 773-0375 (Toll Free) or (646) 440-4371 (International), or email blockfiinfo@ra.kroll.com.
For product related questions, you are welcome to contact our client success team at https://www.blockfi.com/contact/.
14. What if I need to change my account information in the app?
If you need to make updates to your personal information on the platform (i.e. address, contact information, 2FA resets), you can do so by navigating to “Profile Settings.”
15. What’s the status of my BlockFi Card?
The BlockFi Card is paused and cannot be used to make purchases at this time. New cards are not being issued. Clients should continue to make their regular statement payments. Assets held on the BlockFi platform cannot be used towards these payments.
16. What is the status of the claims process?
We anticipate that all claims will be addressed through the chapter 11 process. Creditors will receive information from our claims agent Kroll at the appropriate time and if any action is necessary. Clients with questions about the process may call Kroll at (888) 773-0375 (Toll Free) or (646) 440-4371 (International), or email blockfiinfo@ra.kroll.com.
17. Where can I learn more about BlockFi International Ltd (Bermuda) and the provisional liquidation?
In connection with our chapter 11 cases, the Supreme Court of Bermuda made an order appointing Joel Edwards of EY Bermuda Ltd and Eleanor Fisher of EY Cayman Ltd as Joint Provisional Liquidators (JPLs) of BlockFi International Ltd (a Bermuda-incorporated entity), for the purpose of supporting and facilitating the restructuring of BlockFi International Ltd and the broader BlockFi group.
18. Where can I learn more about BlockFi International Ltd (Bermuda) and the proceedings in Bermuda?
In connection with our chapter 11 cases, the Supreme Court of Bermuda made an order appointing Joel Edwards of EY Bermuda Ltd and Eleanor Fisher of EY Cayman Ltd as Joint Provisional Liquidators (JPLs) of BlockFi International Ltd (a Bermuda-incorporated entity), for the purpose of supporting and facilitating the restructuring of BlockFi International Ltd and the broader BlockFi group.
All claims related to BlockFi International will be addressed through the BlockFi chapter 11 process. Creditors will receive information from BlockFi’s claims agent Kroll at the appropriate time and if any action is necessary. Clients with questions about the process may call Kroll at (888) 773-0375 (Toll Free) or (646) 440-4371 (International), or email blockfiinfo@ra.kroll.com.
Additional information regarding our chapter 11 cases, including the proceedings in Bermuda and claim information, can be found by visiting BlockFi’s claims agent Kroll at https://restructuring.ra.kroll.com/blockfi.
Retail Loans
19. What does this mean for my retail loans and retail loan collateral?
At this time, clients do not have the ability to post new funds to BlockFi. As a result, we put your loan into administrative forbearance.
Any amounts due, including interest and maturity payments, are placed on hold until further notice. The interest rate on your loan will be set to 0% from November 11, 2022 onwards and clients will not be charged additional interest if or when a loan enters delinquency after November 11, 2022. Your loan will not be reported as delinquent to any credit bureaus.
You are not expected to make a payment at maturity while your loan is on hold and there will be no late fees associated with any payments, including at maturity. Additionally, autopay has been turned off for your account, if it was enabled.
Should you have questions about this process, you are welcome to contact our client success team at https://www.blockfi.com/contact/.
20. Why is my retail loan showing as delinquent?
For US-based clients, our loan servicing provider, Scratch, will show your loans as delinquent on their system, but given the 0% interest rate, your loan will not accrue any interest or late penalties. Your loan will not be reported as delinquent to any credit bureaus. Clients can disregard the automatically generated email from Scratch at the time of maturity notifying them of delinquency on Scratch’s system.
21. Is BlockFi liquidating retail loans if the loan reaches liquidation loan-to-value (“LTV”) while platform activities are paused?
At this time, clients do not have the ability to post new funds to BlockFi. As a result, we are putting your loan into administrative forbearance. BlockFi has paused margin call requirements and auto liquidations at predefined loan-to-value levels.
Last updated on January 6th, 2023