In a recent customer email, crypto lending platform BlockFi informed users of its decision to place client loans into forbearance. BlockFi has also removed the possibility of depositing funds onto its platform.
In the email, BlockFi stated,
“At this time, clients do not have the ability to post new funds to BlockFi” "As a result, we are putting your loan into administrative forbearance. Any amounts due, including interest and maturity payments, are placed on hold until further notice."
BlockFi has taken this step to achieve the best possible solution in the aftermath of financial strains caused by the collapse of the FTX crypto exchange. Fully aware of FTX’s imminent collapse, BlockFi halted all withdrawals on its platform by November 10. Following, Blockfi’s announcement, FTX filed for Chapter 11 bankruptcy protection on Nov 11.
The customer email also noted that BlockFi would set all loan interest rates to 0% starting from Nov 11. The crypto lender also stated that "margin call requirements and auto liquidations at predefined loan-to-value levels” will be paused starting from the email date.
According to the email, clients do not need to repay matured loans. To reassure its users, BlockFi noted that it would not report such loans to credit bureaus. As such, loan holders are not required to pay late fees on loans.
Despite taking this stand, BlockFi’s loan servicing provider Scratch will keep a record of delinquent loans in its system. Despite this, such loans won't be penalized or accrue interest since the 0% interest rate is still in effect.
