BlockFi Returns $297M to Their Customers Over the Court Permission

• BlockFi receives $297M for returning to their customers.
• Last November, around 48k customers were involved in transferring $375M.

BlockFi, a digital asset ledger obtained court permission on May 11, 2023. The permission includes giving back $297 million to users who are non-interest-bearing accounts and not to those who moved their payments just a minute ago. 

BlockFi has undergone bankruptcy last year and the founder credentials of the user funds are questioned in Celsius Network and Voyager Digital. That time, the superior Judge rules the cases proclaiming that the funds will be repaid to the creditors and the properties of the company are to be pooled. 

BlockFi’s Shutdown

Michael Kaplan, the U.S. Bankruptcy Judge handled the case and the account deposits to which the interests are unpaid got ruled out. Meanwhile, the ones that are unique from the BlockFi’s Wallet Program and other funds are kept. On the other hand, 48k users intended to transfer around $375M overall from the interest-bearing accounts when the BlockFi’s shutdown happened on November 10. 

However, lawyers put forth the case demanding the funds to be honored and returned to the respective customers. Rather, BlockFi has never been considered and was blocked to perform back-end work, by Kaplan. And he added:

“Quite simply, a customer’s withdrawal or transfer request on the user interface did not and does not automatically transfer digital assets.”

Furthermore, Michael Slade, the Attorney of BlockFi contended in a hearing to let the $375M transfer to liquidate the Wallet customers. He also mentioned that this need to happen for sorting out the additional Wallet claims from assets that are considered fixed pools. 

But, this turned out upside down and the BlockFi filed protection for Chapter 11 to suppose the crypto market volatility over the exposure to FTX.