A Judge Has Ruled That BlockFi Consumers Are Eligible for a $300 Million Refund From Their Custodial Wallets

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Last Updated on May 12, 2023 by Bitfinsider

A bankruptcy judge ruled that BlockFi custodial wallet users are entitled to nearly $300 million because the wallets belong to the clients, not the insolvent crypto lender.

During a hearing in the U.S. Bankruptcy Court for the District of New Jersey, Judge Michael Kaplan commented on the months-long dispute over consumer wallets.

“The court finds that all digital assets held by the debtors in custodial omnibus wallets are client property and not bankruptcy estate property, subject to possible avoidance and clawback rights,” said Kaplan.

The judge ruled against BlockFi returning $375 million in funds that customers attempted to withdraw from interest-bearing accounts, stating that “no transfer request by customers between the BIA and the custodial wallet accounts initiated after 8:15 p.m. on November 10, 2022 were completed and executed.”

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