- The company previously wanted to recognize them as property of the bankruptcy estate
- And that means customers would wait their turn
- Interest account holders would not get a refund
BlockFi custodial wallet users will get almost $300 million back without any queue or involvement in the bankruptcy estate. That was the court’s decision on May 11.
It’s about the assets that are in the Wallet accounts. The court ruled that they belonged to customers and were not BlockFi property. The platform froze those funds on Nov. 10, 2022.
BlockFi lawyers sought to have the cryptocurrencies in the custodial wallets recognized as property of the bankruptcy estate.
That means the owners would have to wait for their return along with other contenders for the company’s assets.
But there’s bad news, too.. This ruling does not apply to $375 million in BIA interest-bearing accounts.
BlockFi customers who stored their cryptocurrencies in such accounts are not eligible for immediate refunds.
They will participate in the bankruptcy estate on an equal basis with the other participants.
The court based its decision on the following logic. Clients placed assets in interest-bearing accounts because they wanted to make a profit.
Which means they will share the risk along with other affected platform users.. Unlike custodial customers, who didn’t expect to profit and simply stored their cryptocurrencies.
We recall that the U.S. Senate questioned BlockFi executives about a “special relationship” with the bankrupt Silicon Valley.