BlockFi, a cryptocurrency lending company, has submitted a request to the United States Bankruptcy Court in New Jersey for the conversion of “trade-only” assets from its users’ accounts into stablecoins. This motion has been backed by the court-recognized BlockFi creditors’ committee.
The assets in question include Dogecoin (DOGE), Bitcoin Cash BCH (BCH), and Algorand’s native token (ALGO). Users are advised to make a one-time exchange to the named cryptocurrency, Gemini Dollar (GUSD) or another stablecoin.
The application suggests that trade-only assets make up no more than 0.5% of total US wallet assets held by BlockFi members. BlockFi is keeping separate holdings for additional trade-only asset types like Cardano (ADA), Solana (SOL), Avalanche (AVAX), and others.
BlockFi initiated the process of returning users’ funds on August 16, after the court gave permission to withdraw funds. On August 29, the court granted permission for a maximum of 16 persons to be part of the process.
The restructuring plan for BlockFi has also received conditional approval by the court and priority is given to recoveries by the corporation. Alameda Research, FTX, Three Arrows Capital, Emergent, and Core Scientific have provided funds for the process.
FTX had previously attempted to recoup hundreds of millions of dollars to cover BlockFi’s debts, however, BlockFi’s legal team tried to thwart their attempts. Furthermore, BlockFi has temporarily banned customers from withdrawing funds starting November 2022. Joining FTX in 2022, Celsius Network and Voyager Digital are also included in the process.