The insolvent cryptocurrency lending site BlockFi will refund customers in California, as per to March 27 notification by the Department of Financial Protection and Innovation (DFPI).
Upon court clearance, the DFPI announced that eligible users will receive more than $100,000 in refunds.
The decision was made after a DFPI investigation found that the now-bankrupt crypto lender had failed to notify customers in a timely manner that they might stop making payments once the company had stopped allowing withdrawals from its platform. The bankruptcy court must yet affirm the ruling.
Californian subscribers were forced to pay BlockFi's servicer an additional $103,471 as a result.
As a result, Californians who borrowed money through BlockFi paid the lender's servicer.
BlockFi requested permission from the bankruptcy court to return these payments to the creditors in a motion it filed with the court on February 24, 2023. The case will not be resolved until a hearing on April 19.
The DPFI said that BlockFi's lending license was halted shortly after its commissioner filed a request to revoke it in November. In December, it also attempted to cancel that license. Due to its inability to properly inform customers, the business agreed to pertinent orders today.
On November 28, BlockFi and its eight subsidiaries filed for Chapter 11 bankruptcy. BlockFi International submitted a bankruptcy petition to Bermuda's Supreme Court on the same day.
The refunds for today are a very small portion of the total amount due to BlockFi's creditors. The company stated in its initial bankruptcy filings that its liabilities ranged from $1 billion to $10 billion. Its bankruptcy proceedings are still ongoing, so it's unclear when customers will be able to get their entire deposits back.