BlockFi, a cryptocurrency lending platform that filed bankruptcy has recently submitted a motion at the bankruptcy court of the United States.
In the motion, BlockFi has requested that the cryptocurrencies on its platform must be unfrozen. They intend to release the cryptocurrencies belonging to their rightful owners.
If the motion is accepted, they will enable to withdrawals feature for the users so they can withdraw their funds.
Motion Filed to Unblock Frozen Funds
BlockFi is another case of a contagion that was spread due to the FTX collapse. The lending platform had a huge amount of funds stuck on the FTX platform and to this day, the funds remain unrecovered.
However, as BlockFi faced major financial and liquidity problems, it had no choice but to pause withdrawals. On December 19, the firm went ahead with filing for bankruptcy.
It also requested protection from the creditors until it was able to come up with a strategy to return funds to the creditors.
As bankruptcy was filed, all the funds were locked up under the supervision of the bankruptcy court. To this day, the funds of the investors are locked up and recently BlockFi has filed a motion to unfreeze them.
If the court approves the motion, BlockFi will be able to release funds to the owners. This way, the users will be able to withdraw their digital assets and move them to different custody wallets.
The case is with the District of New Jersey’s US Bankruptcy Court. It was back on November 10 when the BlockFi platform had blocked withdrawals for the users following the FTX crash.
In addition to the above, the BlockFi teams have also requested that they must be given access to make changes to the user interface. They want to make sure that the users’ funds properly reflect on their profiles.
This way, they will know exactly what they will be able to withdraw from the lending platform when it reopens the withdrawals option.
Communication Sent to Affected Users
Prior to submitting a motion for approval, the officials at BlockFi had sent out a communication to the users who were affected by the incident.
The firm claimed that they could understand what the affected users were going through and that they want to fix the problem for good.
They have already set things into motion and are eager to deal with the problems the users are facing with their funds. They have already requested the approval of releasing funds and hope it will be accepted.
This is an important step they have taken into making things easier and more convenient for the users. If the motion is accepted, they will be able to deal with the major problem.
BlockFi Interest Accounts to Remain Frozen
The officials at BlockFi have made it clear that they have filed the motion for the normal account holders on their platform.
The motion does not include the funds frozen on the BlockFi Interest Accounts. Those accounts will remain blocked until something is done about them.
The BlockFi Interest Accounts will neither be able to request a withdrawal nor will they be able to transfer funds to other wallets.
A Similar Motion has been filed in Bermuda
BlockFi has filed a similar motion at the Supreme Court of Bermuda. The motion is for the wallet accounts for users based outside of the United States.
The international lending platform operated by BlockFi was BlockFi International Ltd. It also ended up filing for Chapter 11 bankruptcy following the FTX exchange’s collapse.
There, the company has requested the court to unfreeze the BlockFi Wallet Accounts so they can release the funds.
Update on the Matter by Tiffany Fong
Tiffany Wong, a famous cryptocurrency blogger recently posted a communication that was sent to her by the officials at BlockFi on December 19.
The communication stated that they were working on the release of their funds and had filed a motion for the approval of their request.
If it is accepted, then they will be able to release the funds of the users much faster than the Celsius Network, another lending platform.