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BlockFi Petitions Bankruptcy Court to Let Clients Withdraw Blocked Assets

Importantly, the funds in question are those that were not stored in BlockFi’s flagship interest-bearing accounts.

2 min read
BlockFi is a crypto lending firm. Image: Shutterstock

Bankrupt crypto lender BlockFi has petitioned the U.S. Bankruptcy Court to allow clients to withdraw cryptocurrencies that are held in their BlockFi Wallet Accounts. 

This request does not impact withdrawals or transfers from BlockFi Interest Accounts, which are set to remain paused at this time, according to the statement. 

The lender, which filed for Chapter 11 bankruptcy protection in late November, citing FTX contagion, called the move an “important step toward our goal of returning assets to clients through our chapter 11 cases” in a statement sent to users.

The firm made a similar claim to the Supreme Court of Bermuda with respect to BlockFi Wallet Accounts held by BlockFi International Ltd, the firm’s international counterpart.

The company also submitted a request, as per another court filing, to update the user interface “to properly reflect assets as of the platform pause.”

What’s next for BlockFi creditors?

On January 9, the bankruptcy court will hold a decision to decide whether it will approve BlockFi’s motion. A similar hearing will be held on January 13 for its international entity. 

BlockFi is far from the only firm hit by the implosion of FTX and which has a customer base blocked from accessing their funds.

Earlier this month, a judge ordered Celsius to return around $44 million worth of cryptocurrencies to consumers, covering only funds that had never touched its flagship interest-bearing service. 

The fate of the vast majority of the consumer funds held by Celsius, the $210.02 million held within its interest-bearing accounts, remains unclear.

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