BlockFi, the cryptocurrency lending firm that declared bankruptcy in November last year, has secured the bankruptcy court’s approval to permit its users to withdraw their digital assets. Earlier today (Thursday), BlockFi opened the withdrawal service nine months after blocking the feature on its platform. However, the service is only currently available to customers in the United States.
BlockFi Secures Court’s Approval for Withdrawal
BlockFi disclosed the opening of crypto withdrawals in a post published on X, noting that the move “is an important step forward toward our goal of returning funds to clients.”
“We encourage all clients to check their email or BlockFi app to see if they are eligible at this time,” the firm stated in the post. “We expect more clients, including international clients, to become eligible to withdraw digital assets from their wallet accounts as we move forward in the court process.”
Earlier today, we opened withdrawals of digital assets from BlockFi Wallet accounts for eligible clients in accordance with the authorization provided by the Court in the Wallet Order: https://t.co/wOc3Fk0VpH
— BlockFi (@BlockFi) August 17, 2023
Some customers of the bankruptcy digital asset lender also took to Twitter to express delight at being able to withdraw their funds. However, others expressed frustration at being unable to do so.
I never thought I'd see the day...BlockFi withdraws enabled for wallet accounts (if you meet requirements)I kissed these assets goodbye a year ago. TIME TO COME HOME ???? in my hardware wallet. Where you will stay. pic.twitter.com/e0zPDYnfVW
— Jesse (@JB3RG_) August 17, 2023
In the court order granted to BlockFi, Michael Kaplan, the US Judge handling the crypto lender’s bankruptcy proceedings, noted that the firm may enable withdrawals for wallet accounts that received transfers from other non-wallet BlockFi accounts during the 90 days before the firm had filed for bankruptcy. However, accounts that received funds in excess of $7,575 during the period are being exempted.
BlockFi and Exposure to FTX
BlockFi is one of the crypto firms that collapsed after Sam Bankman-Fried’s crypto empire, including the once-leading cryptocurrency exchange, FTX crumbled in November last year. Other such firms are digital asset lenders, Genesis, Celsius Network and Voyager Digital.
BlockFi's troubles began in mid-2022 due to its exposure to the collapsed crypto-focused hedge fund, Three Arrows Capital. However, the situation worsened in November as BlockFi halted withdrawals on its platform, citing a “lack of clarity” on FTX’s situation.
Although FTX provided a revolving credit facility of $400 million to the firm as part of its rescue plan, the crypto lender ultimately filed for bankruptcy protection in New Jersey, United States, in late November. The move came days after the troubled FTX also declared insolvency.
Moreover, uncensored financial information uploaded by BlockFi in January showed that the crypto lending firm had exposure of $1.2 billion to both FTX and its sister crypto trading firm, Alameda Research, Finance Magnates reported.
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This article was written by Solomon Oladipupo at www.financemagnates.com.
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