Key Takeaways
In the motion, BlockFi has requested the court to honor client withdrawals from wallet accounts frozen on the platform since early November.
BlockFi says the motion is an important step toward its goal of returning assets to clients through its chapter 11 cases.
Defunct crypto lending platform BlockFi has filed a motion requesting court to allow its users to withdraw digital assets currently locked up in BlockFi wallets. The latest development comes three weeks after BlockFi filed for Chapter 11 bankruptcy, citing significant exposure to collapsed FTX and its sister firm, Alameda Research.
In the latest motion filed with the U.S. Bankruptcy Court in the District of New Jersey, BlockFi has requested the court to honor client withdrawals from wallet accounts that have been frozen on the platform since early November.
BlockFi limited platform activity in November owing to a need for clarity on the status of FTX.com, FTX US, and Alameda. The crypto firm initially denied that most of its assets were held on FTX but later acknowledged “significant exposure” to FTX. The crypto lender has described the latest motion as an important step toward its goal of returning assets to clients through its chapter 11 cases.
The firm had added that the motion would not impact withdrawals or transfers from BlockFi Interest accounts which remain paused currently. “It is our belief that clients unambiguously own the digital assets in their BlockFi Wallet Accounts,” BlockFi stated in an email shared with affected users.
The bankrupt crypto lender is seeking “similar relief from the Supreme Court of Bermuda with respect to BlockFi Wallet Accounts held at BlockFi International Ltd.” The court documents also seek permission to update the user interface to reflect transactions as of the platform’s pause.
In its bankruptcy filing, BlockFi revealed it had more than 100,000 creditors and listed its assets and liabilities as being between $1 billion and $10 billion. The bankrupt lender owes over $1 billion to its three largest creditors, which includes $729 million to Ankura Trust, a distressed loan administration firm, a $275 million loan from West Realm Shires, the holding company for FTX’s U.S. subsidiary, and a $30 million settlement payment to the U.S. Securities and Exchange Commission(SEC).
In late November, BlockFi sued FTX founder Sam Bankman-Fried’s holding company Emergent Fidelity Technologies seeking his shares in Robinhood that were earlier pledged as collateral.
