U.S.;bankruptcy;Judge Michael Kaplan in New Jersey;has approved;the bankrupt crypto lender BlockFi to repay $297M to Wallet customers with non-interest-bearing accounts.
The decision does not include clients who had attempted to transfer money into those accounts at the last minute.
- BlockFi's Wallet program did not pay interest to customers and kept customer deposits separate from other funds on the platform.
- Citing these details, Kaplan ruled that the deposits in the Wallet program belong to the customers themselves.
- However, the deposits in the interest-bearing accounts were able to be used by BlockFi for practices in its lending business.
- That's why the;U.S. judge said the funds in these accounts are not solely owned by the customers.
- BlockFi filed for;Chapter 11 bankruptcy;protection in November last year due to the volatility in the crypto market and its exposure to the collapsed crypto exchange FTX.;
- The move made the firm one of the several crypto-related firms, including Celsius Network, Voyager Digital, and FTX, that went bankrupt after a prolonged crypto winter.
- In the bankruptcies of Voyager and Celsius, the judges similarly;ruled that the funds in the interest-bearing accounts are the property of the bankrupt company, would;be combined with other assets, and would be used to repay all creditors in the future.