Bankrupt crypto lender BlockFi may only release $300 million to creditors
BlockFi received regulatory approval to release only $300 million worth of crypto assets to eligible customers.
BlockFi was a popular crypto lending platform, which was also regulated in several US states. In Nov 2022, BlockFi suspended withdrawal services citing bad market sentiments, after the downfall of the FTX crypto exchange & crypto Hedge firm Alameda Research. Later in late Nov, the company filed for bankruptcy under the Chapter 11 code.
According to the latest report, the Court judge confirmed that wallet transfers from interest-bearing accounts to custodial wallets did not occur after 8:15 pm ET on 10 Nov. So the BlockFi team can’t release $375 million worth of funds to customers, which are in interest-bearing accounts.
The court judge approved the request to the BlockFi bankruptcy leadership team that they can give a withdrawal of $300 million worth of crypto assets to the customers, which are in the BlockFi crypto custody wallet.
Earlier this, BlockFi assured the customers through the email & Twitter advisory that it will give withdrawal of the majority of the crypto assets to the customers but here in the latest court order BlockFi received strict order to not touch those funds for customers, which are in the interest-bearing accounts.
Reports noted that BlockFi customers failed to secure legal ownership of the crypto assets held in the Blockfi crypto interest bearing account.
Such court orders will surely increase the demand for self-custody crypto wallets & people will try to remain away from centralised crypto platforms.
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