Crypto Lender BlockFi Seeks To Return Frozen Assets To Wallet Users: What Customers Need To Know

Defunct cryptocurrency lending platform BlockFi has filed a motion asking a U.S. bankruptcy court to grant permission for its users to withdraw digital assets that are currently locked up in its wallets.

The lender requested permission to recognize client withdrawals from wallet accounts that have been suspended on the platform since Nov. 10 in a motion submitted on Dec. 19 to the U.S. Bankruptcy Court in the District of New Jersey.

Additionally, approval is sought in court proceedings so that the user interface can be updated to accurately display transactions after the activity on the platform was stopped.

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BlockFi stated that it believes consumers unequivocally own the digital assets in their BlockFi wallet accounts in a widely circulated email to affected users, calling the move an "important step toward our goal of returning assets to clients through our chapter 11 cases."

Further, BlockFi stated that the motion will not have an impact on transfers or withdrawals from BlockFi interest accounts, which are currently paused.

The crypto lending platform has stated that it intends to ask Bermuda's Supreme Court for a similar relief with respect to BlockFi wallet accounts held at BlockFi International Ltd.

BlockFi's non-American operations division, BlockFi International, is based in Bermuda.

BlockFi Moving Faster Than Celsius, Says Crypto Blogger

Crypto writer Tiffany Fong tweeted an email she received from BlockFi on Dec. 19, stating that the troubled company seemed to be moving much more quickly than Celsius, which declared bankruptcy more than five months ago, compared to BlockFi's bankruptcy filing in November.

A hearing to determine whether the motion will be granted is planned for Jan. 9, 2023, according to court records.

On Jan. 13, the Supreme Court of Bermuda will hear a different case involving wallet accounts maintained at BlockFi International.

On Nov. 11, BlockFi requested that customers refrain from depositing funds into BlockFi wallets or interest accounts and froze client withdrawals, citing a lack of clarity surrounding FTX.

BlockFi filed for Chapter 11 bankruptcy on Nov. 28 on its behalf and its eight subsidiaries.

On that same day, BlockFi International filed for bankruptcy with the Supreme Court of Bermuda.

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