- BlockFi has agreed to return more than $100,000 to California clients who continued to repay loans despite the company’s trading suspension on November 10th of last year.
- With court clearance, eligible consumers will receive reimbursements, according to the DFPI.
- The crypto lender consented to relevant orders pertaining to its inability to notify consumers on time.
According to a March 27 announcement from the Department of Financial Protection and Innovation (DFPI), the insolvent crypto lending platform BlockFi will pay reimbursements to California-based consumers.
Upon court permission, the DFPI said that eligible users would receive more than $100,000 in reimbursements.
The judgment, which is pending confirmation by a bankruptcy court, comes after a DFPI investigation discovered that the now-bankrupt crypto lender failed to give borrowers timely information that they may cease repaying their debts once the business suspended withdrawals on its platform.
This resulted in subscribers in California paying an extra $103,471 to BlockFi’s servicer.
As a consequence, BlockFi borrowers in California made payments to the lender’s servicer.
In a motion filed with the bankruptcy court on February 24, 2023, BlockFi asked for authorization from the court to restore these payments to the debtors. The case will not be resolved until a hearing on April 19.
The DPFI said that its commissioner sought to terminate BlockFi’s lending license in November and that it was suspended soon after. In December, it also attempted to cancel that license. The company consented to relevant orders today as a result of its inability to alert consumers promptly.
BlockFi and its eight subsidiaries filed for Chapter 11 bankruptcy on November 28. On the same day, BlockFi International filed for bankruptcy with the Supreme Court of Bermuda.
Today’s returns represent just a tiny percentage of the overall money owed to BlockFi’s creditors. In its first bankruptcy filings, the business said that its liabilities were between $1 billion and $10 billion. Its bankruptcy processes are still underway, and it is unknown when consumers will be able to retrieve all of their deposited cash.
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