The justifications presented to the court by BlockFi customers, who declared bankruptcy, did not satisfy the judge.
The bankruptcy judge ruled that transfers made as of November 10 are invalid. The decision made losses more likely for interest-bearing accounts.
BlockFi’s Tribunal Judge Decides Transfers Invalid
New developments continue to occur in BlockFi’s court, which tried to reclaim nearly $300 million worth of crypto after BlockFi freezed transfers last year. The company has been told by a judge that its clients do not have rights over the digital assets and that potential losses will be given to investors with interest-bearing accounts.
US Bankruptcy Judge Michael Kaplan sided with the company and dismissed the objections of a group of customers who claimed they had rights to the coins even before they were moved to a secure, digital wallet. Those holding their assets in interest-bearing accounts waived certain property rights, while those in custodial accounts did not waive these rights.
Jersey City-based BlockFi filed for bankruptcy in November, planning to sell the business or reorganize to pay back creditors. The decision is similar to the decisions made in other crypto company bankruptcies. A federal judge in New York has ruled that Celsius Network users own money deposited into interest-bearing accounts.
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