BlockFi files move to return frozen crypto to wallet users

Bankrupt cryptocurrency lending platform BlockFi has filed a motion with the requesting authority in US Bankruptcy Court to allow its users to withdraw digital assets currently locked in BlockFi wallets.

In a motion filed Dec. 19 in the US Bankruptcy Court in the District of New Jersey, the lender asked the court for the authority to honor customer withdrawals from wallet accounts beginning with the platform’s hiatus on Dec. November.

The court documents also request permission to update the user interface to correctly reflect transactions since the platform’s pause.

In a widely shared email sent to affected users, BlockFi called the motion an “important step toward our goal of returning assets to customers through our Chapter 11 cases,” adding

“It is our belief that customers unequivocally own the digital assets in their BlockFi Wallet accounts.”

According to BlockFi, this motion will not affect withdrawals or transfers from BlockFi interest accounts, which remain paused at this time.

The lending platform also signaled plans to seek “similar relief from the Supreme Court of Bermuda with respect to BlockFi Wallet accounts held at BlockFi International Ltd.”

BlockFi International is a Bermuda-based subsidiary of the company that runs its operations outside the United States.

Crypto blogger Tiffany Fong shared the communication sent to her by BlockFi on Dec. 19, commenting that the firm under attack appears to be moving much faster than Celsius, which filed for bankruptcy more than five months ago in July, than filing for bankruptcy. of BlockFi in November.

According to court records, the hearing to decide whether the motion will be granted is scheduled for January 9, 2023.

While a separate hearing regarding the portfolio accounts held at BlockFi International Ltd is scheduled for January 13, 2023 before the Bermuda Supreme Court.

Related: BlockFi sues FTX’s Bankman-Fried over Robinhood actions

BlockFi halted customer withdrawals and asked customers not to deposit into BlockFi wallets or interest-bearing accounts on Nov. 11, citing a lack of clarity on FTX.

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