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Litigation & Liquidation

Author

Tazeem Chowdhury
May 25, 2023

Litigation & Liquidation

I have been closely following the Blockfi and FTX entanglement. Seems the latest decision revolves around custodial wallets.

BlockFi gets court permission to return $297 million to Wallet customers

Bankrupt crypto lender BlockFi received court permission on Thursday to return $297 million to customers with non-interest-bearing accounts, without repaying customers who had tried to move funds into those accounts at the last minute.

www.reuters.com/legal/blockfi-gets-court-permission-return-297-million-wallet-customers-2023-05-11

  • "BlockFi custodial wallet users can be returned nearly $300 million, as a New Jersey judge ruled on Thursday May 11 that assets sitting in the wallets belong to clients rather than the estate of the bankrupt crypto lender."

  • "Judge Michael Kaplan ruled against repaying a further $375 million in funds that clients tried to withdraw from BlockFi’s interest-bearing accounts, known as BIA, after the company froze funds last year."

  • "Under bankruptcy law, funds which are deemed to belong to customers can be returned immediately, rather than being divided up among creditors of the company’s estate."

Judge says BlockFi customers can be refunded $300 million from custodial wallets: CoinDesk

A bankruptcy judge said assets in custodial wallets belong to customers, not BlockFi.

www.theblock.co/post/230481/judge-says-blockfi-customers-can-be-refunded-300-million-from-custodial-wallets-coindesk