BlockFi Seeks Permission To Convert Trade Only Assets To Stablecoins In Latest Court Petition

Bankrupt digital asset lender BlockFi has filed a court petition requesting permission to convert the Trade Only assets of its users to stablecoins, thus allowing the withdrawal of these tokens. This development marks the company’s latest effort to repay its creditors.

BlockFi Moves To Grants Users Access To Trade Only Assets

According to BlockFi’s petition, the Trade-Only assets are not withdrawable tokens via normal wallet withdrawal processes. In the platform’s US market, these tokens include Algorand (ALGO), Bitcoin Cash (CASH), and Dogecoin (DOGE).

However, On the BlockFi international platform, the Trade Only assets include Cardano (ADA), Cosmos (ATOM), Avalanche (AVAX), and Solana (SOL), among others. BlockFi has stated that its US customer wallets account for only 0.5% of all Trade Only assets, with most of this asset class belonging to customers of its foreign wing.

In supporting its court petition, BlockFi also says that its custodial partner for withdrawing crypto assets via blockchain, BitGo, cannot process blockchain transactions for these Trade Only assets based on the current level of integrations between both companies. 

Therefore, the defunct crypto lender proposes a one-time swap of the Trade Only assets for Gemini Dollar (GUSD) or any other stablecoin. After that, these assets would be transferred to the BitGo platform, where customers can withdraw them. 

BlockFi Continues Efforts To Repay Creditors

As earlier stated, BlockFi’s recent court petition adds to its ongoing actions of debt settlement. The crypto lender generally ramped up efforts to refund its creditors in August.

On August 7, the crypto company acquired the court’s conditional approval on its bankruptcy plan, which will be implanted upon approval by all eligible creditors. Among the numerous initiatives in this plan, BlockFi will look to settle all claims under $ 3,000 via a one-time cash distribution.

BlockFi also gained authorization to open withdrawals on August 17 for the first time since November 2022, when the company enabled a “Platform Pause.” 

On August 21, the popular crypto lender also filed a motion to counter FTX’s motion to recover $5 billion from BlockFi as one of its creditors. According to BlockFi, its customers should be considered more critical than FTX, especially as the defunct exchange was a leading cause of its now-bankrupt state. 

Following the collapse of the FTX exchange in November 2022, BlockFi filed for Chapter 11 bankruptcy protection, citing significant exposure to the crypto exchange. It is estimated that the digital asset lender owes between $1 billion and $10 billion to over 100,000 customers. 

Total crypto market valued at $1.064 trillion on the weekly chart | Source: TOTAL chart on Tradingview.com