(Kitco News) -
BlockFi, the crypto lending platform which was forced to declare bankruptcy on Nov. 28 following the collapse of FTX, has asked the court to allow its users to withdraw their frozen crypto.
BlockFi filed the motion with the New Jersey Bankruptcy Court on Dec. 19, requesting that the court allow them to enable customer withdrawals from their BlockFi wallet accounts, which have been frozen since Nov. 10.
“The Debtors have always prioritized doing right by their clients,” BlockFi wrote in the motion. “At its core, this means respecting the terms of service governing the relationship between the Debtors and their clients. Through this motion, the Debtors seek to do just that, by permitting clients to access digital assets that are owned by them and were held in their Wallet Accounts on BlockFi’s platform as of the Platform Pause.”
BlockFi wrote that according to the platform’s own terms of service, the title to the cryptocurrency in BlockFi Wallets has always remained with the customers. “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,” they said.
In an email sent to customers and shared on Twitter, BlockFi reiterated “It is our belief that clients unambiguously own the digital assets in their BlockFi Wallet Accounts,” and called the motion an “important step toward our goal of returning assets to clients through our chapter 11 cases.”
With the motion, the embattled crypto lender is making good on the promises they made on Nov. 28 to “stabilize its business and provide the Company with the opportunity to consummate a comprehensive restructuring transaction that maximizes value for all clients and other stakeholders.”
As part of its efforts to restructure, BlockFi has been attempting to recover all funds owed to it by various counterparties, including FTX and its associated corporate entities. This effort could take considerable time due to the ongoing bankruptcy process for FTX.
In an update to their clients also issued Nov. 28, BlockFi said “our team has explored every strategic option and alternative available to us, and has remained laser-focused on our primary objective of doing the best we can for our clients. These Chapter 11 cases will enable BlockFi to stabilize the business and provide BlockFi with the opportunity to consummate a reorganization plan that maximizes value for all stakeholders, including our valued clients.”
The court hearing to determine if the motion will be granted for U.S. account holders is scheduled for Jan. 9. A separate hearing to authorize withdrawals from wallet accounts held on the BlockFi International platform is scheduled to be heard by the Supreme Court of Bermuda on Jan. 13.
