BlockFi opens withdrawals for US wallet holders
After months of uncertainty, customers of the now-defunct cryptocurrency lending company BlockFi are finally able to withdraw their funds.
In a recent update on Twitter, BlockFi shared that they have initiated withdrawals for eligible users’ wallets in the United States, as directed by the bankruptcy court. While this is certainly a positive step, it’s important to note that this withdrawal option is currently limited to U.S.-based customers. For customers located overseas, the situation remains more complex as legal proceedings are still ongoing.
The move comes shortly after a New Jersey judge has given the green light for BlockFi wallet holders to re-access their funds that have been frozen on the platform since November.
The decision means that BlockFi’s custodial account holders could receive back nearly $300 million worth of assets, which the judge said it belongs to clients and not part of the company’s estate. However, the ruling will not impact withdrawals or transfers from BlockFi Interest Accounts, which remain paused at this time.
Around $375 million that users attempted to transfer from accounts in which they were paid for lending their crypto back to the company is still locked in BlockFi.
The legal notice further reads: “Debtors are authorized, but not directed, to distribute the digital assets contained in the Custodial Omnibus Wallets and represented in the Client Wallet Accounts as of the Platform Pause Time Stamp from those Wallet Accounts that received transfers from other non-Wallet BlockFi accounts during the ninety (90) days prior to the Petition Date provided that, pending further order of the Court, there will not be any distribution from any Wallet Account that received transfers from other non-Wallet BlockFi accounts (x) in excess of $7,575 during the ninety (90) days prior to the Petition Date and (y) upon entry of the Confirmation Order, in excess of $250,000 and received after November 2, 2022.”
This development is part of the firm’s strategy to address its financial situation and chart a path forward. Once the bankruptcy plan is given final approval, BlockFi will prioritize its efforts on retrieving funds from its major debtors such as Alameda Research, FTX, Three Arrows Capital, Emergent, Marex, and Core Scientific.
As part of its reorganization strategy, BlockFi aims to recover funds from these entities to address its financial situation and mitigate the impact of its own bankruptcy. However, the now-defunct crypto giants, as well as US regulators, have objected to BlockFi’s bankruptcy plan. Their concerns center around several arguments including that it unfairly downgrades their claims, lacks procedural fairness, and broadly absolves BlockFi and its management from legal responsibility. Over a billion dollars of disputed transactions are at stake.