BlockFi Customers Can Be Repaid $300M Held in Custodial Accounts, Judge Says


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.

Bankruptcy 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, as ripples from the collapse of FTX spread through the crypto ecosystem.

“The court finds that all digital assets held by the debtors in custodial omnibus wallets are indeed client property, and not property of the bankruptcy estates, subject, of course, to possible avoidance and clawback rights,” Kaplan said, but had less happy news for BIA customers.

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