Numerous US-based clients of the defunct crypto lending firm, BlockFi, have reported being able to access their accounts following a directive from the U.S. Bankruptcy Court.
Following an injunction from a U.S. bankruptcy court, many clients of the now-defunct crypto lending company BlockFi have reported being able to withdraw money for the first time in months.
BlockFi said that it had enabled wallet withdrawals for qualified users in the United States in accordance with a bankruptcy court ruling via an upgrade to X on August 17.
The lending company claimed that although many wallets managed by customers from other countries were not affected by the withdrawals, legal action was nonetheless being taken. BlockFi stated in its notice to users:
“As authorized by the Court in the Wallet Order, eligible clients at this time include U.S.-based BlockFi Wallet account holders who […] did not withdraw or transfer more than $7,575 worth of digital assets from their BlockFi Interest Account (BIA) or BlockFi Private Client (BPC) on or after November 2, 2022 [and] did not hold any trade-only assets in their Wallet at the time of Platform Pause on November 10, 2022, at 8:15 P.M. E.T.,”
In 2022, a large number of businesses, including FTX, Celsius Network, and Voyager Digital, sought Chapter 11 bankruptcy protection in the United States. BlockFi was one of those businesses.
The loan site stopped client withdrawals in November 2022, but motions to recover user monies were filed in December. BlockFi now has the legal right to accept withdrawals for the first time in nine months thanks to a court ruling that was submitted on August 16 in the District of New Jersey of the U.S. Bankruptcy Court.
A large number of X customers have already reported being able to access their funds, however some who are based outside of the United States claimed they are still ineligible.
On August 2, BlockFi announced that the bankruptcy court had conditionally authorized its reorganization plan. The company also stated that it intended to give priority to recovering funds from companies like Alameda Research, FTX, Three Arrows Capital, Emergent, and Core Scientific.
The U.S. Securities and Exchange Commission also levied a $30 million fine against the loan company, which the regulator said in June it would delay collecting until BlockFi’s users were paid back.
