BlockFi Seeks Court Approval to Transfer Trade-Only Assets into Stablecoins for User Withdrawals
Summary:
Crypto lending firm BlockFi seeks court approval to transfer trade-only assets into stablecoins for withdrawal by users, as part of its ongoing effort to return funds. The assets include Algorand, Bitcoin Cash, and Dogecoin. The request has backing from the Committee of BlockFi creditors. BlockFi, which sought Chapter 11 bankruptcy protection in the US, temporarily halted withdrawals in 2022 but resumed them in August. The company's restructuring plan has received conditional approval, with a focus on recovering funds from entities such as Alameda Research, FTX, Three Arrows Capital, Emergent, and Core Scientific. BlockFi owes an estimated $10 billion to over 100,000 creditors.
Defunct cryptocurrency lending firm BlockFi has made a court application to transfer the trade-only assets from its users' accounts into stablecoins, allowing individuals to withdraw them. This move is part of the company's ongoing effort to return funds to its users, a process that began in August. On August 29, BlockFi filed a request with the United States Bankruptcy Court for the District of New Jersey to convert "trade-only" assets like Algorand, Bitcoin Cash, and Dogecoin into stablecoins such as Gemini Dollar (GUSD). These assets are not easily withdrawable, hence the suggested one-time exchange. The application stated that the trade-only assets represent less than 0.5% of all US wallet assets of BlockFi users. Other trade-only assets held by BlockFi International, such as Cardano, Solana, and Avalanche, are being treated separately. The company's request has received support from the Committee of BlockFi creditors, which has been recognized by the Court. In 2022, BlockFi, along with FTX, Celsius Network, and Voyager Digital, sought Chapter 11 bankruptcy protection in the US. In November 2022, BlockFi temporarily suspended client fund withdrawals, but on August 16, the court granted permission for withdrawals to resume after nine months. BlockFi's restructuring plan has also received conditional approval from the court. The company is focused on recovering funds from entities like Alameda Research, FTX, Three Arrows Capital, Emergent, and Core Scientific. Recently, BlockFi's legal team attempted to prevent FTX from reclaiming hundreds of millions of dollars to repay their own creditors. As of April 2023 estimates, BlockFi owes up to $10 billion to over 100,000 creditors, including $1 billion to its three largest creditors and $220 million to the bankrupt crypto hedge fund 3AC.
Published At
8/30/2023 11:35:45 AM
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