The lending platform halted client withdrawals amid filing for bankruptcy in November 2022 but later petitioned the court for authorization to return user funds.
Many customers at defunct crypto lending firm BlockFi have reported being able to withdraw funds for the first time in months following an order from a United States bankruptcy court.
In an Aug. 17 update on X (formerly Twitter), BlockFi said it had opened withdrawals for wallets of eligible users in the U.S. in accordance with a bankruptcy court order. The lending firm said the withdrawals did not extend to many wallets controlled by international users, but legal proceedings were ongoing.
“As authorized by the Court in the Wallet Order, at this time, eligible clients 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.,” said BlockFi in its notice to users.
Earlier today, we opened withdrawals of digital assets from BlockFi Wallet accounts for eligible clients in accordance with the authorization provided by the Court in the Wallet Order: https://t.co/wOc3Fk0VpH
— BlockFi (@BlockFi) August 17, 2023
BlockFi was one of many firms that filed for Chapter 11 bankruptcy protection in the U.S. in 2022, along with FTX, Celsius Network and Voyager Digital. The lending platform halted client withdrawals in November 2022 but filed motions that December to return user funds.
Related: Crypto custodian Prime Trust files for Chapter 11 bankruptcy
A court order filed on Aug. 16 in the U.S. Bankruptcy Court for the District of New Jersey gave BlockFi the legal authorization to open withdrawals for the first time in nine months. Many X users have already reported being able to access their funds, but some based outside the U.S. said they still were not eligible.
Today is a good day. Blockfi wallet funds finally released for qualified wallet holders. Feels like new funding secured for myself.
— ☘️coronalight no (@dillyflippd) August 17, 2023
BlockFi reported on Aug. 2 that the bankruptcy court had conditionally approved its restructuring plan, adding it planned to prioritize recovering funds from firms including Alameda Research, FTX, Three Arrows Capital, Emergent and Core Scientific. The lending firm also faces a $30 million fine from the U.S. Securities and Exchange Commission, which the regulator said it would postpone collecting until BlockFi’s users were repaid.
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