BlockFi receives permission to return $297M to certain customers

Reuters reports that BlockFi has been cleared to return $297 million to certain customers as part of its bankruptcy proceedings. May 11th.

Specifically, the company is allowed to return funds to customers who held them in BlockFi wallets instead of interest-bearing accounts.

Judge Michael Kaplan ruled that wallet users own their deposits, but customers who keep funds in interest-bearing accounts do not own their balances, giving BlockFi control. . The company used these assets for its lending activities.

Judgment Excludes $375 Million

The ruling excludes users who transferred funds to their wallets as a last resort when BlockFi filed for bankruptcy last November.

At the time, about 48,000 users tried to move $375 million from interest accounts to wallet accounts. The client’s attorneys argued that this amount should also be refunded, but Judge Kaplan said BlockFi did not finalize these transactions, nor would it block such transfers during the service outage. decided against it on the grounds that it is permitted by the Covenant.

BlockFi’s own lawyers have previously argued that returning that $375 million would diminish the value of funds recovered by wallet users. Lawyers said such payments could even prevent BlockFi from returning the funds at all due to poor segregation of the funds.

BlockFi initially suspended user withdrawals and activity on November 10, 2022, amid the collapse of cryptocurrency exchange FTX. BlockFi filed for bankruptcy on November 28.

The company previously refunded $100,000 to users in California in March.

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The post first appeared on CryptoSlate, saying that BlockFi has obtained permission to return $297 million to certain customers.

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