• BlockFi was among the top crypto lenders before it filed for bankruptcy. 
• The US bankruptcy court will hold a hearing on the plea on January 6, 2023. 

BlockFi has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of New Jersey and is now seeking the court’s permission to allow customers to withdraw cryptocurrencies from certain accounts.  

BlockFi wrote in its Twitter thread, “Yesterday, we filed a motion requesting the authority to allow clients to withdraw digital assets held in their BlockFi Wallet accounts, as it is our belief that clients unambiguously own these assets.” 

According to a filing with the US bankruptcy court for district New Jersey, the crypto lender seeks to provide clients access to their digital assets left out in BlockFi wallet products.

December 20, 2022, filing notes that “The Debtors have no legal or equitable interest in cryptocurrency that was present in the Wallet Accounts as of Platform Pause, and clients should be able to withdraw such assets from the platform if they choose.” 

The US bankruptcy court will hold a hearing on the plea on January 6, 2023. 

The plea does not specify access for clients to the company’s flagship Interest Account of BlockFi, which offers interest on the funds deposited by users.   

As part of its restructuring efforts, BlockFi will “focus on recovering all obligations owed to BlockFi by its counterparties, including FTX and associated corporate entities.”  However, BlockFi expects recoveries from FTX will be delayed due to its recent collapse.

On an interim basis, the Court agreed to allow BlockFi to redact the names, addresses and contact information of individuals and clients from the list of its fifty largest creditors, which the firm will submit to the Court.

Could FTX’s collapse be the cause for BlockFi’s Bankruptcy? 

According to media reports, BlockFi also listed an outstanding $275 million to FTX US, the American subsidiary of FTX Bahamas. 

The Financial Advisor of BlockFi, Mark Renzi of Berkeley Research Group, stated, “With the collapse of FTX, the BlockFi management team and board of directors immediately took action to protect clients and the Company.”

“From inception, BlockFi has worked to positively shape the cryptocurrency industry and advance the sector. BlockFi looks forward to a transparent process that achieves the best outcome for all clients and other stakeholders,” he added.

BlockFi’s bankruptcy shows that the company’s largest disclosed client has approximately $28 million balance. 

In an interview on November 28, 2022, Mark Renzi of Berkeley Research Group underlined that BlockFi looks forward to a transparent process that achieves the best outcome for all clients and stakeholders.  

Nancy J. Allen

Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.