BlockFi, a crypto lending platform, is once again making headlines with its recent announcements.
After filing for Chapter 11 bankruptcy protection in November 2022, BlockFi received the approval of a US judge to refund $297 million to customers who deposited funds into its Wallet program.
But there are restrictions on the refund. Customers with BlockFi Interest Accounts (BIA) are not eligible to receive funds returned to the client’s pool.
The reason is that the funds held in the BIA account were used by BlockFi for its lending activities, making them part of the assets of the bankrupts. Therefore, these funds will be used to repay all creditors at a later stage.
According to Judge Michael Kaplan’s ruling, BIA users who attempted to transfer funds to Wallet accounts will not receive refunds at this time. It is obvious that profitable accounts will suffer a large loss.
It is important to note that on November 11, approximately 48,000 BlockFi customers attempted to transfer $375 million from their BIA accounts to their Wallet accounts. However, BlockFi halted all transfers on November 10 at 8:15 p.m., preventing these transfers from taking place. Kaplan added:
“User interface does not accurately reflect transactions”
BlockFi claimed in court documents that approximately $292 million worth of assets were locked on the platform because customers attempted to move them after the pause. But now, BlockFi is allowed to cancel those transactions.