BlockFi to provide over $100K in refunds to California clients

Bankrupt crypto lender BlockFi has agreed to refund much than $100,000 to California customers that had continued to repay loans adjacent aft a trading halt connected Nov. 10 past year. 

According to a March 27 statement from California's fiscal watchdog, the Department of Financial Protection and Innovation (DFPI), its probe discovered astatine slightest 111 borrowers successful California paid backmost astir $103,471 successful indebtedness repayments betwixt Nov. 11 and Nov. 22.

The regulator claimed that BlockFi failed to "provide timely notification to borrowers that they could halt repaying their BlockFi loans."

Californian @BlockFi users: BlockFi to refund implicit $100k aft failing to notify borrowers astir halting repayments post-FTX crash. The question was filed, with a proceeding acceptable for April 19, 2023. Updates to follow. More info: https://t.co/bJkiyfgA1b #FTX #BlockFi #CryptoRefund pic.twitter.com/u0QpwY6oou

The DFPI claims that borrowers were not notified until Nov. 22 that they could halt repaying their BlockFi Loans "until further notice."

According to documents, BlockFi requested support from the bankruptcy tribunal to instrumentality these payments to the borrowers successful a question filed with the tribunal connected Feb. 24, 2023.

The refunds volition beryllium capable to spell up if the question is approved, with a proceeding scheduled for April 19.

Excerpt from the DFPI agreement filed successful court. Source: DFPI

Meanwhile, the DFPI said BlockFi has agreed to an "interim suspension" of its California Financing Law (CFL) licence portion "the bankruptcy and revocation actions are pending."

"If this question is granted BlockFi agrees to nonstop the Servicer to timely instrumentality borrowers' payments, including involvement and precocious fees and each funds paid pursuing the November 10th level pause," according to the DFPI documents. 

Unless different ruled by the bankruptcy court, the regulator said BlockFi's statement to the interim suspension means it volition proceed to nonstop its agents to intermission the postulation of repayments for California customers connected loans, involvement payments and "not charge, levy, oregon measure immoderate precocious fees associated with immoderate payments, including astatine maturity."

BlockFi has besides agreed to proceed not reporting to recognition agencies that loans from California residents person go delinquent oregon defaulted connected oregon aft Nov. 11, 2022, and volition not instrumentality “any enactment that whitethorn harm California residents’ recognition scores connected specified loans.”

Related: BlockFi successful nary contiguous danger, contempt Silicon Valley Bank exposure: Report

According to the DFPI, Commissioner Clothilde V. Hewlett antecedently suspended BlockFi's lending licence for 30 days opening connected Nov. 11, 2022 and moved to revoke BlockFi's CFL licence connected Dec. 15, 2022.

BlockFi halted lawsuit withdrawals and requested clients not to deposit to BlockFi wallets oregon Interest Accounts connected Nov. 10, citing a deficiency of clarity astir the FTX collapse.

Today, BlockFi filed voluntary cases nether Chapter 11 of the U.S. Bankruptcy Code.https://t.co/adaAx6me4r

By Nov. 28, BlockFi filed for Chapter 11 bankruptcy for the institution and its 8 subsidiaries. BlockFi International filed for bankruptcy with the Supreme Court of Bermuda connected the aforesaid day.