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BlockFi Crypto Customers Lose Fight Over Disputed Coin Transfers

  • Bankruptcy judge rules transfers as of Nov. 10 are void
  • Ruling makes losses more likely for interest-bearing accounts
The BlockFi website on Nov. 17, 2022.

The BlockFi website on Nov. 17, 2022.

Photographer: Gabby Jones/Bloomberg

BlockFi Inc. customers who tried to reclaim nearly $300 million in crypto after the company froze transfers last year don’t have a right to the digital assets, a judge ruled, handing potential losses to investors who held interest-bearing accounts.  

US Bankruptcy Judge Michael Kaplan sided with the company and dismissed the objections of a group of customers, who argued they retained rights to the coins even before they were moved into a secure, digital wallet. Those who kept their assets in interest-bearing accounts gave up certain ownership rights, while those in custodial accounts did not. To protect themselves around the time of the freeze, users rushed to move coins into the safer digital wallets.