Judge Sides With Bankrupt Lender BlockFi in Dispute Over Customers’ Crypto in Interest-Bearing Accounts: Report

Judge Sides With Bankrupt Lender BlockFi in Dispute Over Customers’ Crypto in Interest-Bearing Accounts: Report

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A New Jersey judge reportedly ruled that BlockFi owns the funds that customers transferred from interest-bearing accounts when the bankrupt crypto lender froze withdrawals last year.

In November, BlockFi announced it would stop allowing customers to withdraw their funds amid uncertainties on the status of crypto exchange FTX and its trading arm Alameda Research.

A number of BlockFi users made a last-ditch effort to secure their investments and moved their coins even after the platform halted withdrawal transactions at 8:15 PM on November 10th.

Despite receiving messages from the platform’s app saying that the transfers were completed, the customers were not able to get hold of their funds. A dispute then ensued over who has rights over the crypto assets.

A new Bloomberg article reports that U.S. Bankruptcy Judge Michael Kaplan just decided in favor of BlockFi. During a court hearing on Thursday, Kaplan ruled that the notifications from the company’s app were wrong.

Says Kaplan, according to Bloomberg,

“The user interface did not accurately reflect the transactions.”

Court papers show that about $292 million worth of assets were trapped on the platform as a result of customers trying to move their assets after the withdrawal freeze. Kaplan ruled that the company can now cancel these transactions.

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