- Previously, the company wanted to recognize them as the property of the bankruptcy estate
- So customers would have to wait in line.
- In this case, interest-bearing account holders will not receive a refund.
BlockFi custodial wallet users will return almost $300 million without any queues and participation in the bankruptcy estate. This was the judgment of May 11.
We are talking about assets that are on Wallet accounts. The court ruled that they belong to customers and are not the property of BlockFi. The platform froze these funds on November 10, 2022.
BlockFi lawyers sought to ensure that cryptocurrencies on custodial wallets were recognized as the property of the bankruptcy estate. This means that the owners would have to wait for a return on a par with other applicants for the company’s assets.
But there is also bad news. This ruling does not apply to BIA interest-bearing accounts of $375 million. BlockFi customers who have held their cryptocurrencies in such accounts are not eligible for an immediate refund. They will participate in the competitive mass on an equal basis with other participants.
In reaching its decision, the court was guided by the following logic. Clients placed assets in interest-bearing accounts because they wanted to make a profit. This means that they will share the risks with other affected users of the platform. Unlike custodial clients, who did not count on profit and simply kept their cryptocurrencies.
Recall that the US Senate interrogated the leaders of BlockFi about the “special relationship” with the bankrupt bank Silicon Valley.
