BlockFi summons its creditors: deadline of May 15 to claim bankruptcy distributions

BlockFi, the once-major cryptocurrency lending platform, is issuing an emergency appeal to its clients to recover their assets distributed as part of its bankruptcy exit. According to an official company statement, beneficiaries have until May 15 to complete their claim procedures. This critical deadline is approaching quickly, and participation remains surprisingly uneven across regions.

The alarming gaps between American and non-American clients

The figures reveal a major disparity in creditor engagement. To date, 97% of clients based in the United States have already claimed their distributions, while only 43% of clients outside the United States have taken the necessary steps. This significant difference is partly explained by distinct administrative and legal factors.

The distribution process for American clients has been faster and simpler than for non-American clients. The latter had to navigate a more complex legal framework involving American and Bermudian courts. This administrative sluggishness could explain the lower claim rate among international clients.

BlockFi, which filed for bankruptcy in November 2022 following the cascade of failures triggered by the FTX collapse, announced in July 2024 an ambitious plan: to distribute 100% of the dollar value of the claims declared by clients at the time of filing. This promise represents a full repayment rate, a relatively favorable outcome compared to many bankruptcy scenarios in the sector.

Why clients haven’t responded: obstacles to overcome

Several reasons explain the lack of engagement, especially among non-American clients. One of them is that messages sent by the team handling BlockFi’s succession, asking clients to select their preferred payment method, are often mistaken for malicious emails or phishing attempts. In response, BlockFi has collaborated with cybersecurity experts to authenticate its communications and reassure clients about their legitimacy.

Another potential obstacle concerns identity verification. Although all American and non-American clients have already completed a KYC (Know Your Customer) check to access BlockFi initially, the platform now requires a new identity validation for some users wishing to receive their distributions. BlockFi states that this verification process, requiring two pieces of identification, takes only ten minutes to complete.

How to claim your BlockFi distribution before the deadline

For clients who have not yet received their payments or completed their identity verification, the process remains simple and quick. After submitting the two required identification documents and completing the KYC verification form, clients simply need to wait. BlockFi guarantees that payments will be processed and issued within forty-five days of approval of the verification file.

Adhering to this procedure before May 15 is essential for anyone wishing to recover their assets. The company strongly emphasizes: “BlockFi is doing everything possible to make final distributions to all its former clients. We strongly encourage all clients who have not yet received their distributions or who have not completed this procedure to do so before the deadline.”

What happens after May 15: legal consequences

Clients who do not claim their distributions before the May 15 deadline will face definitive legal consequences. According to bankruptcy law, unclaimed assets will be redistributed among other unsecured creditors lower in the repayment hierarchy. This cascade means that potential creditors will have increased priority, at the expense of original BlockFi clients who did not act in time.

It is important to note that this redistribution is irreversible. Once the deadline passes, clients will no longer have access to their funds, which will then benefit other parties in the liquidation process. This strict bankruptcy rule underscores the critical importance of meeting the deadline.

The context: how BlockFi got here

The fall of BlockFi is part of a broader story of turbulence in the cryptocurrency industry. The spectacular collapse of FTX in November 2022 triggered a domino effect across the ecosystem. BlockFi, heavily exposed to FTX through financing arrangements, could not survive the subsequent liquidity shocks. The company was forced to file for bankruptcy to protect its creditors and implement an orderly recovery process.

Since emerging from bankruptcy and announcing its distribution plan in 2024, BlockFi has been striving to honor its commitments to its customers, demonstrating a certain responsibility in managing the crisis. However, the uneven claim rate reveals ongoing challenges related to communication, trust, and administrative complexity in international liquidation procedures within the digital assets sector.