BlockFi set to open customer withdrawals in summer
The lender said it needs to develop new product features and make platform modifications to facilitate withdrawals
Formatoriginal/Shutterstock, modified by Blockworks
Bankrupt crypto lender BlockFi expects to grant customer withdrawals this summer upon the successful completion of essential testing to verify accurate account balances.
In an email sent on Monday, customers were informed that BlockFi received court approval on May 17 to update user interfaces. This is a necessary step to make it easier for clients to withdraw their funds, the firm added.
The digital assets contained within the custodial omnibus wallets, as of the platform pause, do not belong to BlockFi, Judge Michael Kaplan said in the May court order.
“BlockFi needs to build new product functionality and make changes to the platform in order to process these withdrawals,” the lender said, according to screenshots of the email posted to Twitter.
“We anticipate that this work and the necessary testing will be completed by this summer. At that time, we will be in a position to begin making distributions to clients.”
Blockworks has reached out to BlockFi for comment on the timeline.
BlockFi will implement batch withdrawals
The company also announced that clients will be able to move their digital assets from their BlockFi wallets to external wallets, but cash distributions will not be supported.
It plans to start allowing withdrawals from BlockFi wallet accounts for assets that are not at risk of potential preference claims, or demands made by specific creditors who seek to be repaid before others.
Withdrawals will be processed in batches, and users can expect to receive an email as soon as they become eligible to start withdrawing their funds.
During this time, users are encouraged to set up an external wallet, as it will be necessary to facilitate a smooth withdrawal from BlockFi.
Deadline to develop exit plan extended
BlockFi halted withdrawals in November, merely two days after assuring users of its full operational status. The company attributed this action to the uncertainties arising from the downward spiral of Alameda Research and FTX, which had earlier agreed to extend a credit facility to the lender.
This week, BlockFi was given more time to come up with a bankruptcy exit plan. The deadline has been pushed to July 6 due to a disagreement with the unsecured creditors committee.
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