BlockFi, a bankrupt crypto lender, has agreed to provide refunds totaling over $100,000 to its California customers who continued to repay loans despite a trading suspension on November 10th of last year.

The Department of Financial Protection and Innovation (DFPI) of California revealed on Monday that BlockFi had authorized the distribution of $103,471 in refunds through its servicer to its clients in California.

According to the DFPI, BlockFi had failed to promptly notify its customers that they were no longer required to repay loans at the time of the company’s bankruptcy in November.

This has resulted in California users paying roughly $103,471 to BlockFi’s service provider unnecessarily. DFPI mentioned that, through an investigation, it was found that 111 people in California paid that amount between November 11th and November 22nd.

BlockFi had filed a motion to retrieve these funds from its servicer earlier. However, a decision on this matter will be made at a hearing on April 19th.

In November, the DPFI commissioner suspended BlockFi’s lending license and revoked it a month later. The crypto lender has now agreed to comply with the relevant orders after failing to inform and update its customers promptly.

The DFPI mentioned that borrowers were not informed by November 22 that they could stop repaying their BlockFi loans “until further notice.” BlockFi requested the bankruptcy court’s approval to return the payments to the borrowers in a motion filed on February 24th, per the documents.

The refunds processed so far are just a fraction of the total amount the crypto lender is indebted to its lenders.

The organization disclosed in its early bankruptcy filings that it has a liability between $1 billion and $10 billion. BlockFi is bound to pay at least $1.3 billion to significant lenders such as the U.S. SEC, FTX US, and Arkara Trust instead of its customers.

BlockFi has begun reimbursing its users, but its bankruptcy proceedings are still underway.

It remains uncertain when the users will have full access to their deposited funds. Currently, some customers might be required to provide proof of claim, which BlockFi will accept until the end of March. In December, the crypto lender initiated reimbursing its customers, but that was restricted to specific funds.

The DFPI has announced that BlockFi has consented to an “interim suspension” of its California Financing Law (CFL) license while the “revocation and bankruptcy” procedures are in progress. Once the motion is approved, the refunds will be granted; the hearing is scheduled for April 19th.

If this motion is granted BlockFi agrees to direct the Servicer to timely return borrowers’ payments, including interest and late fees and all funds paid following the November 10th platform pause. Unless otherwise ruled by the bankruptcy court, the regulator said BlockFi’s agreement to the interim suspension means it will continue to direct its agents to pause the collection of repayments for California customers on loans, interest payments and “not charge, levy, or assess any late fees associated with any payments, including at maturity.

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