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Crypto lending company BlockFi, which previously announced bankruptcy, has applied to the court to transfer users’ remaining assets as stablecoin for them to be able to withdraw. The request marks the company’s step towards refunding users’ funds, which is a process initiated by the company in August. BlockFi’s restructuring process is notable for its efforts to recover funds from organizations such as Alameda Research, FTX, Three Arrows Capital, as well as its billions of dollars in debt.
Positive Response to the Idea of Conversion to Stablecoin
BlockFi applied to the United States Bankruptcy Court for the District of New Jersey on August 29, requesting permission to convert only tradeable assets to stablecoins. The assets in question were disclosed as Algorand, Bitcoin Cash, and Dogecoin. These crypto assets cannot be easily withdrawn, so BlockFi suggests swapping them with Gemini Dollar (GUSD) or another stablecoin as a one-time exchange.
According to the practice, the amount of assets subject to trade does not exceed 0.5% of BlockFi users’ total US wallet assets. Other assets subject to trade, such as Cardano, Solana, and Avalanche, are held separately by BlockFi International. The BlockFi creditors’ committee recognized by the court supports the company’s request.
Company’s Total Debt is $10 Billion
In 2022, BlockFi became one of the several companies that filed for bankruptcy protection in the United States along with FTX, Celsius Network, and Voyager Digital. It temporarily halted customer withdrawals in November 2022, and on August 16, the court granted the company permission to reopen withdrawal transactions nine months later. The court also conditionally approved BlockFi’s restructuring plan. The company prioritizes recovering funds from organizations such as Alameda Research, FTX, Three Arrows Capital, Emergent, and Core Scientific.
Last week, BlockFi’s legal team attempted to prevent FTX from reclaiming hundreds of millions of dollars to repay its creditors and submitted this request to the court. According to estimates in April 2023, BlockFi owes up to $10 billion to over 100,000 creditors, with $1 billion to its top three creditors and $220 million to the bankrupt crypto hedge fund 3AC.