• A US bankruptcy judge has ruled against BlockFi users in their petition to recover $300 million worth of Bitcoin.
• The decision comes after BlockFi declared bankruptcy in 2022 due to the collapse of several crypto lenders.
• Judge Michael Kaplan cited a lack of communication between BlockFi and its users as the basis for his ruling.
BlockFi Bankruptcy
A US bankruptcy judge has ruled against a petition from BlockFi users to recover $300 million worth of Bitcoin, following the company’s declaration of bankruptcy in 2022 due to turmoil in the crypto space.
Major Setback For Some Users
The decision is considered a major setback for some users who unintentionally forfeited their right to the crypto assets held on the bankrupt lending platform. Judge Michael Kaplan announced the ruling, citing a lack of communication between BlockFi and its customers as part of his reasoning.
Crypto Winter Impacts
BlockFi was one of many companies impacted by the crypto winter, which saw numerous crypto lenders collapse and put major cryptocurrencies into downward spirals. Other similar cases have seen judges side with crypto companies when determining whether users could retain ownership over coins in interest-bearing accounts, which was also true for this case.
Freezing Of Accounts
Things became more complicated when BlockFI froze some accounts shortly before filing for bankruptcy, which confused account types on the platform and made it difficult for customers to understand their rights to funds held on said accounts.
Conclusion
In conclusion, Judge Kaplan’s ruling serves as a reminder that customers must be aware of their rights when dealing with digital assets and ensure they are fully informed before investing or storing such assets.