Were you a BlockFi customer who suffered losses when the cryptocurrency lending platform collapsed? The company officially declared Chapter 11 bankruptcy on Nov. 28, 2022. Its collapse began weeks earlier when it froze client withdrawals. 

The total outstanding debt owed to more than 100,000 BlockFi creditors could be as high as $10 billion. 

How to Submit Proof of Claims

Former BlockFi clients should have already received communication from Kroll, the claims agent for BlockFi. Kroll reached out to known BlockFi customers via email and letters sent through the U.S. postal service explaining the process for registering their claims in accordance with the bankruptcy court’s timeline. 

Kroll maintains a list of assets that each client is allegedly owed from the bankrupt platform. Clients should exercise due diligence by checking the figures on Kroll’s website and reporting any discrepancies. 

Act Now or Miss Your Chance for Recovery

All proof of claims must be submitted by March 31, 2023. If you fail to note the discrepancies between Kroll’s accounts of missing funds and your own records, any decisions about compensation the court makes on your behalf will be based on the information provided by Kroll. 

If you act swiftly, you still have time to submit any supporting documentation regarding BlockFi transfers, assets, BIAs, or anything else pertaining to your BlockFi crypto wallet and account. Send email inquiries to BlockFiInfo@ra.kroll.com. You may also call their toll-free number at (888) 773-0375. 

Can You Sue a Bankrupt Company?

It’s been said that you can sue a ham sandwich, so it's certainly possible to sue a bankrupt company. The larger question is whether your actions will yield any compensation.

In cases like this one with BlockFi, because their Chapter 11 bankruptcy is a reorganization rather than a liquidation, it may indeed be possible to recover your financial losses (or at least a portion of them). 

Crypto Platforms Present Unique Challenges

Unlike when banks fail and the US Federal Deposit Insurance Corporation (FDIC) steps in as the receiver to liquidate assets and repay bank customers, creditors, and depositors, the world of crypto offers no such safety net. 

That makes it far more challenging to predict whether customers will receive money back from BlockFi. Since cryptocurrency is the new kid on the block as far as investment platforms are concerned, there have been few precedents for dealing with crypto-exchange bankruptcies. 

BlockFi has thus far attempted to be transparent about its fiscal circumstances and has also been communicating with its former clients regarding reimbursement of their lost funds. That’s the good news. 

The bad news is that there is no certainty that any investors will ever see all or even any of their investment dollars returned to them. The best course of action at this point is to remain aware of any developments in the BlockFi case filed in the United States Bankruptcy Court, District of New Jersey. 

While it is true that the law can indeed be quite complex, few cases rise to the level of complexity of a bankrupt crypto platform. Most civil litigation generated revolves around unpaid disputes between two people or a corporation and an individual. They can arise over alleged bad debts or personal injuries due to the liable party’s negligence. 

You should know that - in general - the process of filing a lawsuit against a company can be complicated and time-consuming. Consider consulting with a lawyer who is experienced in these types to cases. Your lawyer can help determine if you have a strong case and make sure your rights are protected.

If the situation seems to be a bit smaller than hiring an attorney and filing a civil suit, you can consider small claims court. The benefit of small claims court is that lawyers aren’t required. This makes small claims less intimidating and more affordable for most Americans

With Dispute software, you can start your small claims case by generating, signing, and mailing a demand letter and small claims filing in minutes from your phone or computer. Keep reading below for more info on how to move forward.

Write a Demand Letter

demand letter is a formal letter asking for payment. Strongly worded demand letters on professional letterhead have a better chance of reaching a settlement out of court than regular letters. At Dispute, you can generate a demand letter in minutes.

  1. On the top, in the address block, put in the company name and address. You can find the registered agent at the bottom of this page.
  2. Next, put the subject line as 'Re: Demand for Payment'
  3. In one sentence, tell them how much the other party owes you which you will claim in your small claims lawsuit.
  4. Then, in two to three sentences describe your issue.
  5. Finally, state in plain language that you will go to small claims court if necessary. Don't say that you will do anything else, such as speaking poorly about them.
  6. On the bottom, include your name and address

How to Send a Demand Letter

After you write the demand letter, you’ll want to send it to their registered agent so that it’s guaranteed to go to the legal department. Make sure that you get a tracking number for the mail you send them. It can become important evidence in your case.

Demand letters are often mailed. But if you don’t have time to find a printer, buy an envelope, and visit a post office, we can mail it for you. Send your demand letter with just a click from the comfort of your home with Dispute.

Start your Small Claims Forms

If the dealership does not pay you after receiving the demand letter, you can file a small claim to win your money back. Although this may sound complicated, small claims is actually less complicated than regular court. There are some county guidelines you’ll have to follow, but filing with Dispute can make it easier on you.

You’ll need to find and prepare your small claims form based on where you decide to sue. Usually, people sue where the defendant lives or does business.

Then, wherever you decide to sue, look up the county's small claims system. They’ll provide details on their website about what small claims forms are necessary. You can read more about the small claims process here.

Serve your Small Claims Paperwork

One of the last steps before your trial will be to physically give the small claims paperwork to the defendant. This is called “serving” the defendant. You can’t serve the defendant yourself, but you can find someone else to do it. Many people hire professional process servers. There are legal guidelines that you must follow so that your case can go to court.

Defendants may sometimes avoid service. In order to keep your court date, you should hire a professional process server so that you can be sure all legal guidelines are appropriately followed.

Attend your Small Claims Trial

On the date of your small claims trial, be sure to arrive early and well prepared. Bring at least three copies of all evidence you intend to present, and if your hearing is remote be sure to have provided copies in advance to the other party and to the court. Failure to follow the strict local guidelines can result in your case being dismissed, but if you’ve followed the rules then you can often win by default when the other party doesn’t show up.

How Much it Costs

So how much will you spend by suing in small claims court?

  • Court Filing Fees: The amount you will pay to file a small claims lawsuit depends on how much you are suing for and where you are suing. You can expect to pay between $30 to $400 to file the lawsuit. If you cannot afford to pay court fees, you can ask the court to waive the fees.  ‍
  • Serving Costs: Once the lawsuit is filed, you must notify the defendant that you have sued them. This is called "serving." Serving Costs can range from $20-100 depending upon the local area.

‍Remember, if you win, you can request that the other party pay for your court fees and serving costs.‍

The Benefits of Small Claims Court

  1. Court filing fees are cheaper in small claims than in other courts.
  2. The process is faster in small claims than in other courts, as your hearing will usually be scheduled 30-70 days after you file the lawsuit.
  3. Lawyers are generally not allowed in small claims, which helps keep the costs of suing low.  

Taking the First Step in Your Lawsuit

If all of this work seems complicated or daunting, rest assured that it's easier than it initially seems. 2.7 million small claims court cases are filed annually in the US, which is only growing as more people realize how easy it is to enforce their legal rights in court.

Suing can be a complex and challenging process. It's essential to gather evidence and understand the legal process. If you believe that you have been the victim of this crime, don't hesitate to seek legal advice. By taking action, you can hold the company accountable for its actions and receive the compensation you deserve.