Key takeaways:
- BlockFi resumes US crypto withdrawals post regulatory dispute pause.
- Withdrawals excluded numerous wallets of international users, legal proceedings remained active.
On August 17, 2023, BlockFi, formerly a prominent cryptocurrency lending company, initiated the process of allowing eligible clients in the United States to withdraw their digital assets.
This event follows a court directive and represents a noteworthy advancement in the complex bankruptcy proceedings, which have been characterized by numerous disputes. The reinstatement of withdrawal services pertains specifically to qualifying holders of BlockFi Wallets located within the U.S.
These individuals must satisfy specific conditions as stipulated in the court-endorsed Wallet Order. It is important to note that this resumption of withdrawals is not presently applicable to the wallets of international users, as legal proceedings concerning such cases continue to unfold.
Nevertheless, the court overseeing the bankruptcy case has adopted a distinct perspective regarding individuals with funds held within a wallet account. According to this viewpoint, these individuals are considered to retain complete ownership of their funds.
Consequently, they have now been granted authorization to initiate withdrawals. However, clients should be mindful of several important conditions, including the following:
1. Limited to clients within the United States.
2. Clients should not have withdrawn or transferred digital assets exceeding the value of $7,575 from their BlockFi Interest Account (BIA) or BlockFi Private Client (BPC) subsequent to November 2, 2022.
3. Clients should not have possessed any trade-only assets within their Wallet at the time of the Platform Pause on November 10, 2022, at 8:15 P.M. Eastern Time.
Despite the clearly defined criteria, a number of BlockFi users have encountered issues during the withdrawal process. Several clients, who had been notified of their eligibility through emails, faced difficulties when attempting to finalize their withdrawal requests.
On August 2, BlockFi announced that its restructuring plan had been conditionally approved by the bankruptcy court. The company also disclosed its intention to prioritize fund recovery from entities such as Alameda Research, FTX, Three Arrows Capital, Emergent, and Core Scientific.
Additionally, BlockFi is facing a $30-million penalty from the U.S. Securities and Exchange Commission. This penalty, initially scheduled for collection in June, has been postponed until after the repayment of BlockFi’s users.
