BlockFi Users Can Withdraw $300M From Custodial Wallets But Not $375M From Interest-Bearing Accounts - Judge
"$375 million that users tried to transfer out of interest-bearing accounts after Nov. 10 still belongs to the estate, Bankruptcy Judge Michael Kaplan said."
"BlockFi custodial wallet users can be returned nearly $300 million, as a New Jersey judge ruled on Thursday May 11 that assets sitting in the wallets belong to clients rather than the estate of the bankrupt crypto lender."
"Judge Michael Kaplan ruled against repaying a further $375 million in funds that clients tried to withdraw from BlockFi’s interest-bearing accounts, known as BIA, after the company froze funds last year."
“BIA account holders deposited their assets into these accounts with the full knowledge that they were undertaking certain risks in exchange for the chance of greater returns,” Kaplan said, but custodial wallet holders “did not share this risk or return and should not have their ownership of non estate property diluted by those who took on such risks.”
"Under bankruptcy law, funds which are deemed to belong to customers can be returned immediately, rather than being divided up among creditors of the company’s estate."