BlockFi Can Return Nearly $300M to Some Wallet Customers, Judge Rules

“The user interface did not accurately reflect the transactions,” Kaplan said in court

article-image

rafapress/Shutterstock modified by Blockworks

share

BlockFi customers who held crypto in interest-bearing accounts don’t have a right to nearly $375 million in crypto after the bankrupt lender froze assets last year, a judge ruled. 

However, customers who held custodial wallets did not give up the same ownership rights. 

Around $300 million can be returned to customers who held crypto in custodial accounts, meaning non-interest-bearing accounts.

BlockFi froze transfers in early November of last year, and officially filed for bankruptcy on Nov. 28. It quickly followed FTX following the defunct exchange’s collapse.  

According to Judge Michael Kaplan, wallet transfers from interest-bearing accounts to custodial wallets did not occur after 8:15 pm ET on Nov. 10. 

So, customers who still had crypto tied up in interest-bearing accounts – which totaled nearly $375 million – no longer have the right to those assets despite receiving email and in-app confirmation from BlockFi. 

BlockFi, in court papers, said that $292 million in assets were stuck on the platform, all of which can be canceled by the company in Kaplan’s ruling. 

“The user interface did not accurately reflect the transactions,” Kaplan said in court, according to a Bloomberg report. 

“Quite simply, a customer’s withdrawal or transfer request on the user interface did not and does not automatically transfer digital assets,” Kaplan said, per Reuters.

The back-and-forth on account withdrawals has been ongoing since late last year.

Last December, the bankrupt lender filed a motion to allow some withdrawals to be processed though, even then, it was unclear if the interest-bearing accounts would be included in withdrawals. 

In April, BlockFi was granted extra time to file its bankruptcy strategy. It has until May 15 to file its exit plan. 

Kaplan reportedly granted the extension in hopes of making the continuation of the case smoother.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates.jpg

Research

Figure, founded by former SoFi CEO Mike Cagney, has emerged as a leader in onchain RWAs, with ~$17.5B publicly tokenized. The platform’s ecosystem volume is growing ~40% YoY as it expands beyond HELOCs into student loans, DSCR loans, unsecured loans, bankruptcy claims, and more. Operationally, Figure cuts average loan production cost by ~93% and compresses median funding time from ~42 days to ~10, creating a durable speed-and-cost advantage.

article-image

The Ethereum co-founder suggested LINEA holders would be eligible for other airdrops in cryptic tweet

article-image

The layer-2’s biggest release yet brings benefits — but a post-upgrade outage caused a chain reorg

article-image

Crypto is shifting into risk-on mode — pump.fun dominates meme activity, while Lido leans on treasury maneuvers

article-image

If the president breaks the Fed, he’ll own the budget problems

article-image

Combining Franklin Templeton’s tokenization expertise with Binance’s trading infrastructure could speed crypto adoption, companies say

article-image

The firm’s upcoming filing comes as competition heats up over the USDH stablecoin