BlockFi to refund over $100,000 to California clients

The crypto-lending platform BlockFi will pay $103,471 to California-based clients who continued to repay loans for 11 days after BlockFi’s operations were suspended in November 2022.

Californian @BlockFi users: BlockFi to refund over $100k after failing to notify borrowers about halting repayments post-FTX crash. The motion was filed, with a hearing set for April 19, 2023. Updates to follow. More info: https://t.co/bJkiyfgA1b #FTX #BlockFi #CryptoRefund pic.twitter.com/u0QpwY6oou

— CA Department of Financial Protection & Innovation (@CaliforniaDFPI) March 27, 2023

The Department of Financial Protection and Innovation (DFPI) said the company “did not timely notify borrowers that they could cease repaying their loans” until further notice.

The court will hear the regulator’s motion on April 19, 2023. If approved, 111 platform clients will receive funds, including interest and late fees.

On February 24 BlockFiзапросила permission from the bankruptcy court to return payments to borrowers.

The DFPI said the platform agreed to a “temporary suspension” of its California Financing Law license while “the proceedings and the revocation of the license” are being considered.

If the court does not issue any other decision, the platform will suspend collection on state borrowers’ loan payments and interest payments. BlockFi “will not charge, levy, and assess any late fees related to any payments, including after the due date,” the regulator said.

The company will refrain from sharing delinquency or default data on state clients with credit bureaus and will not take “any actions that could harm the corresponding ratings.”

On November 11, 2022 BlockFi halted withdrawals, citing the FTX and Alameda Research crisis. A few days earlier, the platform’s founder Flori Marques stated that all of the company’s products were operational, and the business did not depend on the firms Sam Bankman-Fried.

On November 28 BlockFi and eight subsidiary entities filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. FTX Group took this step on November 11.

In December, the platform’s management filed in the District Court of New Jersey a motion to permit withdrawals of user funds from wallet accounts.