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.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Permissionless is a conference for founders, application developers, and users. Come meet the next generation of people building and using crypto.

recent research

Blinks Report Image.png

Research

Blinks enable the ability to vampire attack user monetization of existing networks by inserting onchain and financialized functionalities directly within the popular social feeds and digital experiences of today.

article-image

Plus, how the FTX collapse played out in Asian countries

article-image

Kalshi founder Tarek Mansour said Thursday marked the “the first trade on regulated election markets in nearly a century”

article-image

I was excited about being on the precipice of realigning societal incentives and solving many issues plaguing our modern financial world

article-image

Cypherpunk Holdings has rebranded to Sol Strategies in a pivot to a Solana-first investment approach

article-image

BitGo’s wrapped bitcoin (wBTC) has a new custodial challenger

article-image

Make no mistake: Tether makes a ton of money. But exactly how much depends a lot on the price of bitcoin.