BlockFi Asks Court for Permission to Convert Trade-Only Assets Into Stablecoins – The crypto lending company BlockFi, which is no longer operational, has submitted a court application to move trade-only assets from users’ accounts to stablecoins. This action is part of the company’s efforts to facilitate the withdrawal of funds by individuals, continuing the process initiated in August.
BlockFi submitted a request to the United States Bankruptcy Court for the District of New Jersey on August 29th. They are seeking approval to convert assets known as “trade-only” assets, which include Algorand, Bitcoin Cash, and Dogecoin, into stablecoins. These assets are not readily withdrawable, so BlockFi is proposing a one-time exchange for stablecoins like Gemini Dollar (GUSD) to provide an accessible withdrawal option.
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As per the application, the portion of “trade-only” assets does not surpass 0.5% of all the wallet assets held by BlockFi users in the US. Other similar assets like Cardano, Solana, Avalanche, etc., are being held separately by BlockFi International. The Court-recognized Committee of BlockFi creditors has given their support to the company’s request.
In 2022, BlockFi joined a list of companies, including FTX, Celsius Network, and Voyager Digital, seeking Chapter 11 bankruptcy protection in the US. By November 2022, it temporarily halted client fund withdrawals. On August 16th, the court granted permission for the company to resume withdrawals after a nine-month hiatus. BlockFi’s restructuring plan has received conditional approval from the court.
The company’s focus is on recovering funds from entities like 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. As of April 2023 estimates, BlockFi’s outstanding debt was potentially up to $10 billion, owed to over 100,000 creditors. This includes $1 billion to the three largest creditors and $220 million to the insolvent crypto hedge fund 3AC.