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BlockFi Files Motion to Return Frozen Crypto to Wallet Users

BlockFi, a crypto lender, has asked a U.S. bankruptcy court for permission to give users their crypto back.

BlockFi has filed a motion with the United States Bankruptcy Court asking for permission to let its users get their digital assets out of their BlockFi Wallets. BlockFi is a crypto lending platform that went bankrupt.

In a motion filed on December 19 with the U.S. Bankruptcy Court in the District of New Jersey, the lender asked the court for permission to honour client withdrawals from wallet accounts after the platform stopped working on November 10.

In the court papers, they also ask for permission to update the user interface to show transactions correctly after the platform stopped.

In an email to affected users that was widely shared, BlockFi called the move a “important step toward our goal of returning assets to clients through our Chapter 11 cases.” They also said, “It is our belief that clients clearly own the digital assets in their BlockFi Wallet Accounts.”

BlockFi says that this change won’t affect withdrawals or transfers from BlockFi Interest Accounts, which are still on hold for now.

The lending platform has also said that it wants to ask the Supreme Court of Bermuda for “similar relief with respect to BlockFi Wallet Accounts held at BlockFi International Ltd.”

BlockFi International is a part of the company that is based in Bermuda and runs its operations outside of the United States.

Tiffany Fong, a crypto blogger, shared the email she got from BlockFi on December 19. She said that the troubled company seems to be moving much faster than Celsius, which filed for bankruptcy more than five months ago in July, while BlockFi filed for bankruptcy in November.

On January 13, 2023, the Supreme Court of Bermuda is set to hold a separate hearing about wallet accounts held at BlockFi International Ltd.

BlockFi stopped customer withdrawals and asked customers not to add money to their BlockFi wallets or Interest Accounts on November 11. They said this was because there wasn’t enough information about FTX.

By November 28, BlockFi had filed for Chapter 11 bankruptcy for the company and its eight subsidiaries in the United States Bankruptcy Court for the District of New Jersey. The same day, BlockFi International went to the Supreme Court of Bermuda to file for bankruptcy.

 

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