A bankruptcy judge in New Jersey has ruled that approximately $300 million could be refunded to BlockFi customers holding funds in their custodian wallets. The decision comes as bankruptcy proceedings continue for the troubled cryptocurrency lender.
Judge Michael Kaplan said the assets held in these wallets belonged to the customers, not the bankruptcy firm. He noted that clients do not relinquish control of their funds to BlockFi, and that the company simply acts as a custodian.
Although Customers Can Get Back Cryptocurrencies on BlockFi, They Will Not Earn Interest
The decision was described as a victory for BlockFi customers, who were worried they would lose their funds as a result of the company's bankruptcy. But this is not a complete victory. The judge also ruled that BlockFi could not repay another $375 million in funds that customers tried to withdraw from the company's interest-bearing accounts. These funds are now part of the bankruptcy filing.
The decision is a sign for BlockFi that the bankruptcy process is progressing. The company filed for bankruptcy in July 2022 after being hit hard by the collapse of the TerraUSD stablecoin.
The bankruptcy process is expected to take several months to complete. Meanwhile, BlockFi continues to operate. The company said it is still able to meet its obligations to customers and creditors.
The decision is a positive development for BlockFi customers. This means that even if they can't get back everything they've lost, they can get some of their funds back. The decision is also a sign that the bankruptcy process is progressing for BlockFi.
*Not investment advice.