•BlockFi seeks to reopen withdrawals for users who have crypto locked in wallet accounts.
• A hearing on the motion is scheduled for Jan. 9 at 10 a.m. ET.
• BlockFi filed for bankruptcy after brokered deal with FTX collapsed.
• On Nov, 28 BlockFi filed for Chapter 11 bankruptcy protection claiming more than 100,000 creditors as well as between $1 billion and $10 billion in both assets and liabilities.
• Bankrupt crypto lender Celsius also made a similar motion in its restructuring process.
BlockFi’s recent announcement to reopen withdrawals for users who have cryptocurrency locked away in wallet accounts is a must-welcome move. With digital assets on the rise and more people investing in them, the increased demand for easy and secure access becomes evident. This strategic decision by BlockFi to provide users with quick withdrawal capabilities will allow them to capitalize on their investments with greater ease and confidence. Being able to withdraw crypto without delays can boost user engagement with cryptocurrencies and make the pursuit of financial success more achievable. This also shows that BlockFi takes its responsibility as a reliable custodian of funds seriously, inspiring trust from its customers.
BlockFi Bankruptcy Filing
The bankruptcy filing was made in anticipation of a motion that will be filed by BlockFi before the United States Bankruptcy Court seeking permission to reopen wallet accounts and allow customers with crypto locked in those wallets to make withdrawals. In its filings, BlockFi stated that it has more than $1 billion in total liabilities and approximately 200 creditors. Most of these creditors are users who have crypto stored within their wallet accounts with BlockFi.
Reopening Wallet Accounts and Withdrawals
Blockfi seeks to reopen withdrawals for users with crypto locked in wallet accounts so they can gain access to their funds. The motion will also ask that any outstanding amounts owed by customers be waived or forgiven in order for them to withdraw their funds without having to pay back any fees or interest owed on loans taken out using the platform. In addition, Blockfi also asked that any customer data stored on its servers be deleted upon withdrawal of funds from their wallets. This would ensure that customers’ personal information remains secure when they withdraw from the platform.
Celsius’ Similar Motion During Its Restructuring Process
This situation is similar to what happened during Celsius’ recent restructuring process earlier this year when Celsius filed a motion requesting permission from the court to reopen wallet accounts and allow customers with crypto locked up in those wallets access to their funds during its Chapter 11 proceeding. The court granted permission to allow users with crypto on Celsius’ platform to access their funds after Celsius promised not to pursue collection efforts against customers who withdrew from their wallets prior to the start of its bankruptcy proceedings.
The outcome of both cases will ultimately depend on whether or not the courts grant permission for these companies to reopen wallets and allow customers access to their funds while they undergo restructuring processes. If granted, customer confidence in these platforms may increase as they regain control over their funds during times of uncertainty such as this one. Either way, it serves as an example of why it is important for customers using these types of platforms should always take precautions when investing in digital assets such as cryptocurrency or other tokens issued by companies undergoing bankruptcy proceedings.
While you are enjoying our Solanews/Metafi content be sure to check out our social media channels to stay on top of all things web3, crypto, and the metaverse!