Bankrupt crypto lender BlockFi has taken another step in the process of returning users’ funds by requesting court permission to convert trade-only assets into stablecoins.
The defunct company has applied to the United States Bankruptcy Court for the District of New Jersey to allow the conversion of assets such as Algorand, Bitcoin Cash, and Dogecoin into stablecoins like Gemini Dollar (GUSD).
This move is part of BlockFi’s ongoing effort to facilitate the withdrawal of funds for its users, a process initiated in August.
As per the application submitted, the portion of trade-only assets constitutes less than 0.5% of all BlockFi users’ US wallet assets. Other assets like Cardano, Solana, and Avalanche are being held separately by BlockFi International.
The Committee of BlockFi creditors, which the Court has recognized, is in favor of the company’s request.
In 2022, BlockFi joined several companies in seeking Chapter 11 bankruptcy protection in the US, including FTX, Celsius Network, and Voyager Digital. In November 2022, it temporarily halted client fund withdrawals. On August 16, the court allowed the company to resume withdrawals after a nine-month hiatus.
BlockFi’s restructuring plan has received conditional court approval. The plan focuses on recovering funds from entities such as Alameda Research, FTX, Three Arrows Capital, Emergent, and Core Scientific. Recently, BlockFi’s legal team attempted to prevent FTX from retrieving hundreds of millions of dollars to repay their creditors.
Based on April 2023 estimates, BlockFi owed up to $10 billion to over 100,000 creditors, including $1 billion to its three largest creditors and $220 million to the bankrupt crypto hedge fund 3AC.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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