BlockFi to convert ALGO, BCH, and Dogecoin into stablecoins
Defunct cryptocurrency lending firm BlockFi is taking further steps to facilitate the return of users’ funds by applying to a court for permission to transfer “trade-only” assets from users’ accounts into stablecoins, allowing for withdrawals. This move follows the company’s initiation of the fund return process in August.
On August 29, BlockFi submitted an application to the United States Bankruptcy Court for the District of New Jersey seeking authorization to convert the designated trade-only assets into stablecoins. These assets, which include Algorand’s native token ALGO, Bitcoin Cash, and Dogecoin, have limitations on easy withdrawal. BlockFi proposes a one-time exchange into stablecoins like Gemini Dollar (GUSD) to address this issue.
The application clarifies that the trade-only assets represent less than 0.5% of all U.S. wallet assets held by BlockFi users. Additional tokens such as Cardano ADA, Solana SOL, and Avalanche AVAX, among others, are held separately by BlockFi International.
The committee of BlockFi creditors, officially recognized by the court, is supporting the company’s request to facilitate the exchange process, the filing says.
After months of uncertainty, customers of the BlockFi were finally able to withdraw their funds. The lender has initiated withdrawals for eligible users’ wallets in the United States earlier this month. While this was certainly a positive step, 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.
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.