News 
Coin Information 
About us 
In a significant development, BlockFi, an insolvent cryptocurrency lending platform, has received legal approval to refund its Wallet program customers $297 million, according to a report by Reuters on May 11.
Judge Michael Kaplan, overseeing the bankruptcy proceedings, clarified that this refund would not extend to BlockFi Interest Account (BIA) holders. The exclusion of BIA holders is due to BlockFi's operational structure, as BIA funds were integral to its lending operations and are now part of the bankruptcy estate. Therefore, these funds will be used to repay BlockFi's creditors.
The Wallet program, which offered no interest on customer deposits, maintained a separate financial ecosystem within BlockFi. Approximately 48,000 BIA users attempted to transfer $375 million to their Wallet accounts on November 11, following BlockFi's service freeze after the FTX crash. However, despite allowing transfer operations on its application interface, the transactions were effectively nullified in the system's backend.
Legal representatives for the affected customers argued for a refund of these transfer attempts. Nevertheless, Judge Kaplan upheld that BlockFi, in accordance with its terms of service, had the right to halt transaction requests during the service outage.
BlockFi, facing speculation about its financial stability after the FTX incident, filed for Chapter 11 bankruptcy protection in late November. The lender's liquidity at the time of filing was $256.9 million, with court documents revealing a major claim from West Realm Shires Services Inc. (operating as FTX US) and a significant $30 million debt owed to the U.S. Securities and Exchange Commission.
To compensate its creditors, numbering over 100,000 and collectively owed an estimated $10 billion, BlockFi is considering the sale of its cryptocurrency mining hardware and $160 million worth of Bitcoin-collateralized loans.
With a May 15 deadline to present its bankruptcy exit strategy, BlockFi's legal counsel, Joshua Sussberg, indicated that the company is exploring options such as an asset sale or seeking external financial support for a restructuring arrangement.
Comment 0