BlockFi files to be allowed to convert users’ trade-only assets into stablecoins

BlockFi files to be allowed to convert users’ trade-only assets into stablecoins

By Charles Thuo - min read
  • BlockFi is requesting to convert the assets to Gemini Dollar (GUSD) or another stablecoin
  • The motion has been backed by the court-recognized BlockFi creditors’ committee.
  • BlockFi started the process of returning users’ funds on August 16 after the court allowed the corporation to open withdrawals.

BlockFi, a defunct cryptocurrency lending company, has filed a court application asking for the conversion of “trade-only” assets from its users’ accounts into stablecoins so that the users can withdraw them. The request is a further step in the process the corporation started in August to restore user monies.

The request was submitted on August 29 to the District of New Jersey of the United States Bankruptcy Court. The assets in question include Dogecoin (DOGE), Bitcoin Cash (BCH), and Algorand’s native token (ALGO). Users can not currently withdraw the named cryptocurrencies and BlockFi is advising a one-time swap to Gemini Dollar (GUSD) or another stablecoin.

Attempts to allow BlockFi users to withdraw their funds

BlockFi’s application claims that trade-only assets make up no more than 0.5% of total US wallet assets held by BlockFi members. BlockFi International is keeping separate holdings of additional trade-only assets like Cardano (ADA), Solana (SOL), Avalanche (AVAX), and others.

BlockFi applied for Chapter 11 bankruptcy protection in the United States in 2022 joining FTX, Celsius Network, and Voyager Digital.  At the same time, BlockFi temporarily barred customers from making withdrawals starting in November 2022.

BlockFi was, however, granted permission to open withdrawals for the first time in nine months on August 16 by the court.

The restructuring plan for BlockFi has also received the court’s conditional approval and funds from companies including Alameda Research, FTX, Three Arrows Capital, Emergent, and Core Scientific are prioritized for recovery by the corporation.

Earlier on, BlockFi’s legal team attempted to thwart FTX’s attempts to recoup hundreds of millions of dollars to cover its debts.