BlockFi, the cryptocurrency lending company currently under Chapter 11 protection in the United States, has filed a favorable request for some of its customers. Indeed, BlockFi has filed a motion with the court to allow some of its users to withdraw their funds hosted on the platform’s wallet.
BlockFi wants to refund some of its users
BlockFi, the cryptocurrency lender previously declared bankruptcy on November 28, is seeking to refund some of its aggrieved customers, according to a court document dated December 19.
The petition, filed in New Jersey bankruptcy court, seeks to allow BlockFi users to make their cryptocurrency withdrawals in the normal way. This concerns customers who have funds currently blocked on their wallet hosted on the platform.
Indeed, BlockFi offered 2 distinct types of services: a return service as well as a cryptocurrency custody service. The motion filed by BlockFi concerns exclusively users with funds in a wallet, and not those who have used the platform’s yield service.
The news was notably shared by investigator Tiffany Wong, recently highlighted for her interview with Sam Bankman-Fried:
WOW, @BlockFi has already filed a motion requesting client withdrawals for assets held in BlockFi Wallet Accounts. S/O to BlockFi for moving exponentially more quickly than @CelsiusNetwork in Ch 11. pic.twitter.com/JvtWzMklNA
– Tiffany Fong (@TiffanyFong_) December 20, 2022
” WOW, BlockFi has already filed a motion to allow customers to withdraw their assets held in BlockFi Wallet accounts. Hats off to BlockFi for acting much faster than Celsius Network in Chapter 11. “
According to a second court filing, BlockFi also wants to update its user interface “to properly reflect the assets blocked since the platform was shut down. “
BlockFi caught up in FTX
The cryptocurrency lending company had already found itself in some trouble following the collapse of hedge fund Three Arrows Capital (3AC) in May, as the company, which was declared bankrupt, was unable to repay a $1 billion loan to BlockFi.
But the fatal blow came with the bankruptcy of FTX, as the exchange had struck a bailout deal in June with BlockFi to help it turn things around. As a result, the cryptocurrency lending company was forced to file for Chapter 11 bankruptcy in the US, with no one left to keep it afloat.
Regarding BlockFi’s request to reinstate withdrawals for affected users, they will have to wait for a January 9 hearing to rule on the matter. A second hearing is scheduled for January 13, this time concerning BlockFi International Ltd, its subsidiary responsible for managing its business outside the US, also to allow users to withdraw their cryptocurrencies.
At the moment, the number of creditors affected by BlockFi’s bankruptcy is estimated at around 100,000, with an uncertain amount currently estimated at between $1 billion and $10 billion.
