- BlockFi announces plans to release funds frozen in its Wallet Accounts back to its users.
- Sharing emails to all its affected users, the crypto lender says the client’s funds in its Interest Accounts remain paused.
- The crypto community compares BlockFi’s quickness at releasing customer funds amidst Chapter 11 bankruptcy against Celsius Network.
Though the crypto market has been bearish most of the year, there may be hope that the gnawing ice of the crypto winter might be fading slowly and gradually. In its bid to take accountability for its action, BlockFi, a now-bankrupt crypto lending platform, has moved a motion to the United States Bankruptcy Court to grant it the authority to release frozen user funds back to the users.
The motion states BlockFi requests the US bankruptcy court permission to allow its users to withdraw all digital assets held in BlockFi Wallet Accounts. Filed on December 19, the crypto lender visited the United States of America’s Bankruptcy Court in the District of New Jersey to ask the court to let it honor the client withdrawals from wallet accounts locked in the platform.
BlockFi had earlier restricted withdrawals on its platform due to the liquidity crunch of the infamous cryptocurrency exchange platform, FTX. The crypto lender was exposed to FTX’s filing for bankruptcy, along with many other crypto firms tied with FTX at the time of the exchange’s crash.
On November 10, BlockFi halted all transactions on its platform, urging users not to deposit any funds. The FTX crisis was an unexpected drawback for nearly everyone in the crypto industry, further deepening the hold of the crypto winter in the market.
Sadly, BlockFi was one of the unlucky ones to have been affected by SBF’s company, which had earlier taken on the role of a shining white knight for the crypto lender in June.
Nearly a month after BlockFi filed for Chapter 11 bankruptcy, the company filed a motion to release its users’ funds stuck in wallet accounts. The New Jersey-based company had shared an email to all affected parties, alerting them of its plans to release their digital assets.
“We took an important step toward our goal of returning assets to clients through our Chapter 11 cases. We believe that clients unambiguously own the digital assets in their BlockFi Wallet Accounts,” the email reads.
Further in the email, the crypto firm announced its plans to approach the Supreme Court of Bermuda, saying: “We will be seeking similar relief from the Supreme Court of Bermuda for BlockFi Wallet Accounts held at BlockFi International Ltd.,”
However, BlockFi had clarified that this motion, which it requested at the bankruptcy court, will not affect the withdrawals or transfers from BlockFi Interest Accounts, which are still paused.
BlockFi users with funds locked in the crypto lender’s platform had taken to Twitter to express their feelings about this development. A blogger, Tiffany Fong, had posted to her 34k followers, spreading the news and praising BlockFi’s speed in correcting its wrongs.
“Wow, @BlockFi has filed a motion requesting client withdrawals for assets held in BockFi Wallet Accounts. S/O to BlockFi for moving more quickly than @CelsiusNetwork in Ch 11,” she said on Twitter.
However, the crypto community is wondering about BlockFi’s silence on releasing users’ funds locked in the platform’s Interest Account.
“When can we have our assets that are in the Interest Accounts? It’s ours,” a user commented under BlockFi’s announcement tweet.
Additionally, BlockFi has requested the court’s approval to update its User Interface to mirror transactions made between the suspension of withdrawal. According to the court document, the final decision on whether the court will grant BlockFi’s request will be made on January 9, 2023. Similarly, a hearing about the client’s accounts with BlockFi International Ltd. is scheduled for January 13, 2023.
Memory Lane Down BlockFi’s Tragedy
Founded in 2017 and based in New Jersey, BlockFi rose to a value of $3 billion. However, since its dealings with the disgraced FTX crypto exchange, the crypto lending platform had taken a turn for the worse, especially when FTX unexpectedly filed for bankruptcy, throwing the entire crypto market into a chaotic war room which saw a lot of crypto companies, BlockFi included, also file for bankruptcy due to extensive exposure.
Conclusion
The New Jersey-based crypto lender, BlockFi, announces its plans to return clients’ funds stuck in its Wallet Accounts amidst its Chapter 11 bankruptcy filing. The crypto firm has submitted its request to the US Bankruptcy Court but says nothing about the client funds trapped in its Interest Accounts.
