According to the California Department of Financial Protection and Innovation (DFPI), BlockFi has agreed to refund $103,471 to its California clients.
According to a March 27th announcement by DFPI, the institution has reached a settlement with BlockFi to refund its Californian users.
The deal was reached after a DFPI investigation found that the crypto lender failed to notify borrowers properly. DFPI claims that BlockFi did not give timely notice to its borrowers that they did not need to continue making payments on their loans after it paused withdrawals. Due to the postponed announcement, Californian borrowers paid around $103,471 to the lender.
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The bankrupt crypto lender requested permission from the court to refund customers on February 24th. If approved, the repayments will come into effect immediately after a court hearing scheduled for April 19th.
As part of the agreement with DFPI, BlockFi will continue to suspend the collection of repayments on all loans from its California clients. The platform will not charge any levy or late fees to these clients. Additionally, it will not report the clients to credit agencies for non-payment on or after November 11th.
BlockFi froze withdrawals and deposits shortly after the collapse of the crypto exchange FTX on November 10th, 2022, citing the uncertainty caused by the downfall. Its exposure to FTX eventually forced BlockFi to file for Chapter 11 bankruptcy protection.
It is worth noting that DFPI suspended BlockFi’s lending license on November 11th, 2022, for 30 days and then moved to revoke its CFL license on December 15th, 2022.
The refunds represent a tiny fraction of what BlockFi owes its clients. In its November 28th bankruptcy filing, the defunct crypto lender stated that its liabilities were between $1 billion and $10 billion.
However, at the beginning of March, BlockFi received some positive news from collapsed crypto-friendly Silvergate Bank. The institution is set to return BlockFi’s deposit of $9.8 million.
