According to the Associated Press on May 11th, a US chief justice has allowed blockFi, a cryptocurrency lending company, to go bankrupt and refund $297 million to users with savings in the wallet project
Asset refunds are not suitable for consumers of BlockFi loan interest accounts (BIA). According to Bankruptcy Judge Michael Kaplan, the assets in the BIA account are used by BlockFi for its credit business and therefore are assets of the bankruptcy estate. This means that this asset will be mainly used to repay all creditors in the future.
In contrast, the wallet scheme does not pay interest to customers' banks and is separated from other funds.
The presiding judge also ruled that BIA clients attempting to transfer assets to their wallet would have difficulty obtaining a refund at this time. On November 11th, nearly 48000 BlockFi customers attempted to transfer $375 million from their BIA account to their Wallet account, after the company froze its services after the FTX bankruptcy.
Regarding: BlockFi will provide refunds exceeding $100000 to California users in the United States
However, BlockFi does not prohibit the use of the transfer option in its previous application software. Users can buy and sell transactions in their accounts or even accept email confirmation. However, those transactions are prohibited from being used at the end of BlockFi, which means they cannot be executed.
The lawyer for this customer believes that BlockFi should also return his transfer. Judge Kaplan stated that under BlockFi's service terms, borrowers have the right to block requests for transactions during the shutdown period.
BlockFi completed Chapter 11 bankruptcy maintenance in mid to late November, and in the previous few days, there were speculations about its operations after the FTX crash. At that time, this cryptocurrency lending company had $256.9 million in liquidity. According to the documents of the People's Court, West Real m Shires Services Limited Liability Company (expanding the market under the name FTX US) remains at the top of the creditor list, while also owing $30 million in debt to the US Securities and Exchange Commission.
The company attempted to sell its data encryption mining equipment and $160 million in BTC applicable loans to repay creditors. BlockFi's debt to over 100000 creditors may be $10 billion
BlockFi needs to submit a bankruptcy exit plan before May 15th. According to its lawyer Joshua Sussberg, BlockFi has explored the probability of selling its assets or exploring the possibility of external supporters applying recombination buying and selling.
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