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BlockFi Repayments to Its 100,000 Creditors Will Begin This Month

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Bankrupt crypto lender BlockFi will begin interim crypto distributions to creditors through Coinbase starting this month, the company wrote on Twitter and in a blog post.

“The distributions will be processed in batches in the coming months, and eligible clients will receive a notification to the BlockFi account email on file,” the company wrote on Wednesday. “Please note that non-US Clients are unable to receive funds at this time due to the regulatory requirements applicable to them.”

The news marks a significant step in BlockFi’s long journey since filing for Chapter 11 bankruptcy protection in November 2022 amid the collapse of crypto exchange FTX.

Founded in 2017 by Zac Prince and Flori Marquez, BlockFi quickly rose to prominence by offering high-yield interest accounts and crypto-backed loans. The company secured significant funding, including a $350 million Series D in March 2021 that valued it at $3 billion.

However, trouble began brewing in July 2021 when several U.S. states issued cease-and-desist orders against BlockFi, claiming its interest accounts were unregistered securities. In February 2022, the crypto lender settled with the SEC for $100 million over its lending product.

The killing blow came in November 2022, when FTX collapsed. BlockFi had substantial exposure to FTX and its trading arm, Alameda Research, with over $1.2 billion in assets tied up between them. When FTX and Alameda went under, BlockFi followed, citing liquidity issues. The lender filed for Chapter 11 bankruptcy on November 28, 2022, listing over 100,000 creditors.

In the ensuing proceedings, BlockFi executives largely blamed their woes on FTX and Alameda. The lender’s restructuring plan, which paves the way for creditor repayments, received 90% approval from voting creditors.

BlockFi emerged from bankruptcy in October 2023, nearly a year after filing. As part of its bankruptcy exit plan, BlockFi is now preparing to return customer funds, with distributions expected to start in early 2024.

According to BlockFi’s recent announcement, the company has partnered with Coinbase to facilitate the distribution of funds to creditors. The defunct crypto lender will begin processing withdrawals for wallet customers first, followed by distributions for BlockFi Interest Account (BIA) and loan customers.

The company estimates that BIA holders will recover anywhere from 39.4% to 100% of their funds, depending on the outcome of the FTX bankruptcy proceedings and the value of BlockFi’s equity in Robinhood.

As of July 2024, BlockFi customers are still awaiting the interim distributions announced by the company. Wallet customers have been able to withdraw funds, but BIA and loan customers have not yet received any repayments. The exact timing and amounts of these distributions remain uncertain, as they are tied to the complex legal proceedings surrounding FTX’s bankruptcy.

Edited by Stacy Elliott.

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Bitcoin

Bitcoin Nears $96K, Continuing Wild ‘Trump Trade’ Rally

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BTC traded above $95,900 in early Asian hours, less than 6% from a landmark $100,000 figure that would push it above a $2 trillion market capitalization.



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Bitcoin Boosts MicroStrategy (MSTR) to Higher Trading Volume Than Tesla and Nvidia

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Follow Nikolaus On X Here

Today, MicroStrategy (MSTR) surpassed a $100 billion market cap to become the 93rd largest publicly-traded company in the U.S.

At the time of writing, MSTR has done more trading volume than both stock giants Tesla and Nvidia today, and has traditional stock traders like the Wall Street Bets community losing their minds.

 This is absolutely mindblowing considering MicroStrategy was a mere $1 billion company when it first bought bitcoin for its treasury about four and a half years ago.

MicroStrategy’s market cap from when they first bought Bitcoin to now

The big question I’m asking myself is, how and when does this end? Assuming MSTR continues to pump until the peak of this bull market, it’s anyone’s guess on how high MSTR may go.

But how hard will it crash in the bear market, considering it is essentially a leveraged trade on bitcoin? Dare I even suggest that this time may be different, and that the downside of the next bitcoin bear market won’t be as brutal as the 70%+ corrections we’re historically used to seeing?

Even with the spot bitcoin ETFs, and the notion that the US may lead the charge of nation states buying up mass amounts of bitcoin, I’m still not convinced that we don’t eventually see a massive downturn in bitcoin’s price. And I’m mentally preparing for a normal bitcoin bear market to commence after this bull market finishes sometime in the next year or so.

But back to MSTR — Michael Saylor has thus far proven that the Bitcoin for Corporations strategy works in stunning fashion. Public companies have been coming out of the woodwork this past week announcing that they’ve purchased bitcoin for their balance sheet or plan to do so, and it seems this trend will continue as the CEO of Rumble asked his X audience if he should add BTC to their balance sheet (almost 94% of his 42,522 voters voted “yes”).

 Michael Saylor even offered to help explain how and why Rumble should adopt a corporate BTC strategy.

Institutional bitcoin adoption is here and it’s only going to grow for the foreseeable future. As companies figure out the logic behind adopting bitcoin as a strategic reserve asset, the number of publicly-traded companies that adopt this strategy is going to explode.

Companies that add bitcoin to their balance sheet will rise above most other companies — even top big tech giants — in terms of trading volume, as MicroStrategy has, until all companies add bitcoin to their balance sheet. I try to put myself in the shoes of a trader, with knowledge on Bitcoin and think to myself, “Why on earth would I buy any company’s stock if they don’t have bitcoin on their balance sheet?” I wouldn’t — it would be way too boring.

Putting BTC on the balance sheet helps create volatility, and therefore opportunity for stock traders, which is good for the traders, stock price, and company overall. If you are a publicly-traded company, it is a no brainer to adopt bitcoin as a treasury reserve asset.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.





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Options on Bitcoin (BTC) Exchange-Traded Funds Marks Milestone, Despite Position Limits

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Park explained on X that the exercisable risk, representing the total value of option contracts exercised or converted to actual shares, equates to less than 0.5% of IBIT’s outstanding shares. Meanwhile, the industry standard is closer to 7%, which would represent a comparative figure of 7%. To show how small the 0.5% figure is, bitcoin CME futures contracts are allowed to trade 2,000 contracts, which is the equivalent of 175,000 for IBIT.



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