The atmosphere in the crypto market seems to be looking bright again. Bankrupt crypto lender, BlockFi has submitted a motion asking a bankruptcy court in the United States to grant permission for its wallet holders to gain access to crypto that is held in their BlockFi wallets.
In addition to the above request, the court documents also sought permission from the court for BlockFi to update users’ interfaces to reflect transactions that have occurred since the platform was halted. The crypto lending firm highlighted that it is aiming to prioritize the terms of service that govern its relationship with its customers.
BlockFi gave statements in a widely distributed email to its users that the firm will also be filing for a relief petition with the Bermuda Supreme court regarding the BlockFi accounts that are being held at BlockFi International Ltd, a Bermuda subsidiary.
The defunct firm highlighted that it is within legal rights for clients to gain access to their locked-up funds since it has no benefits in the digital assets of wallet users that were held in its platform at the time it halted customers’ withdrawals.
BlockFi hinted that users who deposit funds following the halt of withdrawals will be able to withdraw such funds if the petition is approved by the court.
A hearing to decide whether to approve the motion is planned for January 9, 2023, while the Bermuda Supreme Court will have a separate hearing on the wallet accounts held by BlockFi International Ltd on January 13, 2023.
BlockFi’s Financial Situation
BlockFi is a financial services company that offers a variety of products and services to assist investors, both individuals, and institutions, in managing and growing their wealth.
The platform announced in November that it was pausing customers’ withdrawals over its exposure to the defunct FTX exchange and its subsidiary firm, Alameda Research LLC. The firm eventually filed for Chapter 11 bankruptcy protection in a Delaware court after realizing that it could no longer conduct its operations as it used to due to liquidity issues.
BlockFi eventually sued Sam Bankman-Fried’s holding firm, Emergent Fidelity Technologies Ltd over purported collateral that the disgraced crypto pioneer allegedly pledged. The disputed collateral is that which Bankman-Fried owns in the newly launched online trading platform, Robinhood.
According to the complaint, BlockFi agreed with Emergent on November 9th to guarantee the repayment of an unnamed borrower by putting up some “common stock” as collateral.
