Bankrupt crypto lender BlockFi wants customers to be able to withdraw funds

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BlockFi is asking the court to allow customers to withdraw their crypto assets because the company has “no legal or equitable interest”. BlockFi is asking to remove unprocessed withdrawal requests after the November 12 suspension. Former FTX CEO Sam Bankman-Fried agrees to be extradited to the United States for doing thigh straights with clients.

BlockFi is seeking approval from a US court to allow customers to withdraw funds locked on the platform since November 10. Monday’s court filing says the funds legally belong to the customers and the company has no “legal or equitable interest.” BlockFi’s request came just a day before former FTX CEO Sam Bankman-Fried agreed to be extradited to the United States.

BlockFi intends to honor customer withdrawals

The petition filed in the U.S. Bankruptcy Court for the District of New Jersey cited BlockFi’s “Wallet Terms of Use,” stating that crypto assets “held in your BlockFi wallet will remain with you at all times and will not be transferred to BlockFi”.

BlockFi stressed that the debtors have no “legal or equitable interest in the cryptocurrency that was present in the platform’s wallet accounts.” The company added in the filing that “customers should be able to remove these assets from the platform if they wish.”

The case is currently before the courts and is due to be heard on January 9. There will be a second hearing on January 13 devoted to wallet accounts in the custody of BlockFi International, a subsidiary that handled non-US operations domiciled in Bermuda.

FTX’s Bankman-Fried Endorses US Extradition

Sam Bankman-Fried (SBF), the founder and former CEO of FTX, has agreed to be extradited to the United States, where he is expected to face charges of money laundering and fraud. SBF has been held by Bahamian authorities since his arrest early last week.

Despite the nod to his extraction, it remains to be found out when Sam Bankman-Fried will leave the Bahamas for the United States. The court did not set an additional date on the matter.

Yet on FTX, the team overseeing the company’s bankruptcy proceedings are working around the clock to recover millions of dollars in donations made by SBF to politicians.

The team, led by John Ray III, says some politicians and other recipients of FTX funds are asking for instructions on how to return the funds.

It was previously reported that Sam Bankman-Fried made as many as $46.5 million in political donations in the months leading up to the liquidity crisis at FTX. Currently, the bankrupt exchange is working with recipients for a voluntary return of these contributions. However, he will soon be taking legal action in bankruptcy court to ensure that all funds are returned.

FTX filed for bankruptcy on Nov. 12 after the exchange suffered a liquidity crunch due to overwhelming withdrawal requests. An article published by CoinDesk on Nov. 2 revealed that Alameda Research, the trading arm of FTX, held a significant amount of FTT, a token issued by the exchange.

The article triggered cascading events with Binance announcing its intention to liquidate FTT holdings. FTX was forced into bankruptcy after Binance pulled out of a deal to acquire the company to protect its customers. The collapse of FTX continues to weigh on the crypto market, with centralized exchanges like Binance in the spotlight over how they handle customer deposits.

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