Crypto lender BlockFi has petitioned a US bankruptcy court for permission to return crypto held in BlockFi wallets to users.
Bankrupt crypto lending platform BlockFi has filed a motion to seek permission from a US bankruptcy court to allow its users to withdraw digital assets currently locked in BlockFi wallets.
In a December 19 U.S. In a petition filed by the Bankruptcy Court for the District of New Jersey, the lender asked the court for permission to honor customer withdrawals from wallet accounts that have been frozen on the platform since November 10.
The court documents also request permission to update the user interface to correctly reflect transactions since the platform was disrupted.
In a widely circulated email sent to affected users, BlockFi called the request “an important step toward our goal of returning assets to clients through our Chapter 11 cases,” adding:
“We are confident that customers clearly own the digital assets in their BlockFi wallet accounts.”
According to BlockFi, this request will not affect withdrawals or transfers from BlockFi interest accounts, which are currently on hold.
The lending platform also signaled its intention to “seek a similar appeal in the Bermuda Supreme Court in relation to BlockFi wallet accounts with BlockFi International Ltd.”
BlockFi International is a subsidiary of the Bermuda-based company that conducts its operations outside of the United States.
Sharing the notice sent to her by BlockFi on Dec. 19, crypto blogger Tiffany Fong commented that the struggling company appears to be moving much faster than Celsius, which filed for bankruptcy more than five months ago, compared to BlockFi, which filed in November filed for bankruptcy.
A hearing to decide whether to grant the motion is scheduled for Jan. 9, according to court documents.
A separate hearing on the wallet accounts held at BlockFi International Ltd is scheduled for January 13 in the Bermuda Supreme Court.
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BlockFi halted customer withdrawals on Nov. 11 and urged customers not to deposit into BlockFi wallets or interest accounts due to a lack of ambiguity regarding FTX.
On November 28, BlockFi filed for Chapter 11 bankruptcy for the company and its eight subsidiaries. BlockFi International filed for bankruptcy in the Bermuda Supreme Court the same day.