Bankrupt digital asset lending firm BlockFi has filed a court application for permission to convert its users’ Trade Only assets into stablecoins, allowing withdrawals of those tokens. The development marks the company’s latest effort to repay creditors.
BlockFi Moves to Giving Users Access to Trade-Only Assets
According to BlockFi’s petition, transaction-only assets are not tokens that are withdrawable through the normal wallet withdrawal process. In the platform’s U.S. market, these tokens include Algorand (ALGO), Bitcoin Cash (CASH) and Dogecoin (DOGE).
However, on the BlockFi International platform, Trade Only assets include Cardano (ADA), Cosmos (ATOM), Avalanche (AVAX), and Solana (SOL), among others. BlockFi said its U.S. client wallets hold just 0.5% of all Trade Only assets, with most of the asset class belonging to clients in its foreign division.
BlockFi also said in support of its court petition that BitGo, its custodial partner for extracting crypto assets via the blockchain, cannot handle blockchain transactions of these trade-only assets based on the current level of integration between the two companies.
Hence, the defunct cryptocurrency lender proposes a one-time exchange of the trade-only asset for Gemini Dollar (GUSD) or any other stablecoin. Afterwards, these assets will be transferred to the BitGo platform where customers can withdraw them.
BlockFi Continues Efforts to Repay Creditors
As previously mentioned, BlockFi’s recent court petition further bolsters its ongoing debt settlement efforts. The cryptocurrency lender broadly ramped up refunds to creditors in August.
On August 7, the cryptocurrency company received conditional approval from the court for its bankruptcy plan, which will be implemented after all eligible creditors approve it. Among the program’s many initiatives, BlockFi will seek to resolve all claims under $3,000 with a one-time cash distribution.
So BlockFi Authorized The company will open withdrawals on August 17 for the first time since the company launched a “platform pause” in November 2022.
On Aug. 21, the popular cryptocurrency lender also filed a motion to rebut a motion by FTX as one of its creditors to recover $5 billion from BlockFi. According to BlockFi, its customers should be considered more important than FTX, especially since the defunct exchange is the main reason for its current bankruptcy status.
Following the collapse of the FTX exchange in November 2022, BlockFi filed for Chapter 11 bankruptcy protection, citing significant risks to the cryptocurrency exchange. The digital asset lender is estimated to owe $1 billion to $10 billion to more than 100,000 customers.
Total crypto market valued at $1.064 trillion on the weekly chart | Source: TOTAL chart on Tradingview.com
Featured image via Reuters, chart via Tradingview.