BlockFi Asks Courts to Allow Clients to Withdraw Digital Assets 

BlockFi is asking courts to allow its clients to withdraw digital assets from their accounts. 

The bankrupt crypto lender said in a Tuesday (Dec. 20) update on its website that it filed a motion with the U.S. Bankruptcy Court to allows clients to withdraw digital assets from their BlockFi Wallet Accounts. 

The firm added that it will do the same with the Supreme Court of Bermuda regarding BlockFi Wallet Accounts held at BlockFi International Ltd. 

“Yesterday, we took an important step toward our goal of returning assets to clients through our chapter 11 cases,” BlockFi said in the update. “It is our belief that clients unambiguously own the digital assets in their BlockFi Wallet Accounts.” 

This motion does not apply to BlockFi Interest Accounts, for which withdrawals and transfers remain paused, according to the update. 

BlockFi also requested permission to update the user interface of its platform to reflect transactions as of the pause on Nov. 10 so that all clients are treated fairly, the user interface properly reflects the digital assets in accounts at the time of the pause and BlockFi can honors withdrawal requests properly, should they be authorized by the courts, the update said. 

The company said in the update that it expects its request to be heard by the U.S. court on Jan. 9, 2023, and by the Bermuda court on Jan. 13, 2023. 

“While filing this motion is an initial step, we will continue to work towards solutions that maximize value for all clients and other stakeholders and will share updates as quickly as practicable,” BlockFi said in the update. 

As PYMNTS reported at the time, BlockFi announced on Nov. 28 that it would seek bankruptcy protection following its decision to pause activity on its site. 

The firm was a casualty of the multibillion-dollar collapse of cryptocurrency platform FTX. BlockFi suffered a solvency crisis during the summer after crypto prices plummeted, shaking digital assets markets. 

In need of rescue, BlockFi accepted a lifeline from FTX in the form of a $400 million revolving credit facility. It reportedly used most of the credit facility to right its balance sheet, while also extending millions of dollars in loans that used FTX’s now nearly worthless FTT tokens as collateral. 

When announcing its bankruptcy, BlockFi said it would focus on recovering all obligations owed to it, including those owed by FTX. 

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