2023-02-04
Business Global News

BlockFi files motion to return frozen crypto to wallet users

Crypto lender BlockFi has asked a U.S. bankruptcy court for the authority to return the crypto held in BlockFi wallets to users.

Bankrupt crypto lending platform BlockFi has filed a motion requesting authority from a United States bankruptcy court to allow its users to withdraw digital assets currently locked up in BlockFi wallets. 

In a motion filed on Dec. 19 with the U.S. Bankruptcy Court in the District of New Jersey, the lender asked the court for authority to honor client withdrawals from wallet accounts that have been frozen on the platform since Nov. 10.

The court documents also request permission to update the user interface to properly reflect transactions as of the platform’s pause.

In a widely shared email sent to affected users, BlockFi called the motion an “important step toward our goal of returning assets to clients through our chapter 11 cases,” adding:

“It is our belief that clients unambiguously own the digital assets in their BlockFi Wallet Accounts.”

According to BlockFi, this motion will not impact withdrawals or transfers from BlockFi Interest Accounts, which remain paused at this time.

The lending platform has also signaled intentions to seek “similar relief from the Supreme Court of Bermuda with respect to BlockFi Wallet Accounts held at BlockFi International Ltd.”

BlockFi International is a subsidiary of the company based in Bermuda, which runs its non-U.S. operations.

Crypto blogger Tiffany Fong shared the communication sent to her by BlockFi on Dec. 19, commenting that the embattled firm appears to be moving much faster than Celsius, which filed for bankruptcy over five months ago, compared to BlockFi’s bankruptcy filing in November. 

According to the court documents, a hearing to decide if the motion will be granted is scheduled for Jan. 9.

A separate hearing regarding wallet accounts held at BlockFi International Ltd is scheduled to go before the Supreme Court of Bermuda on Jan. 13.

Related: BlockFi sues FTX’s Bankman-Fried over shares in Robinhood

BlockFi halted client withdrawals and requested clients not to deposit to BlockFi wallets or Interest Accounts on Nov. 11, citing a lack of clarity around FTX.

By Nov. 28, BlockFi filed for Chapter 11 bankruptcy, for the company and its eight subsidiaries. BlockFi International filed for bankruptcy with the Supreme Court of Bermuda on that same day.

Source : Cointelegraph.com