BlockFi confirms move to allow BlockFi Wallet users access to funds – Cryptonium News

BlockFi confirms move to allow BlockFi Wallet users access to funds

On December 20, BlockFi issued a statement confirming the filing of a petition regarding access to funds for BlockFi Wallet users.

While the company is best known for its profitable BlockFi Interest Accounts service, the primary product of the BlockFi ecosystem was crypto wallets for storage. Portfolios were not eligible for credit services. Therefore, BlockFi claimed that it “believes its customers have clear ownership of these assets.”
The Wallet’s Terms of Service (ToS) clearly state that the cryptocurrency stored in the wallet is the property of the individual, not BlockFi.

Ownership of the cryptocurrency stored in your BlockFi wallet will always remain with you and will never be transferred to BlockFi.”

This statement was made hours after the leaked email revealed that customers would soon be able to access their funds.

Funds deposited into BlockFi were transferred to a BlockFi wallet. Users can put their digital assets into one of the earning services and earn up to 10% interest on Stablecoins and other assets.
The wallet’s terms of service also confirm that it is an “interest-free” account.
Our BlockFi Wallet is an interest-free cryptocurrency account that allows you to store, transfer, and manage cryptocurrency stored in your account.”

In early 2022, BlockFi ran into problems due to liquidity issues. She reported that she held only 10% of her clients’ funds in reserves. This is comparable to a partially reserved bank. Additionally, 50% of funds were reported to be in short-term positions. However, due to the high risk of borrowing virtual currency, BlockFi ultimately faced liquidity problems and was forced into bankruptcy.

It is currently unclear why customer funds, clearly identified as the exclusive property of the customer, were included in the bankruptcy proceedings. However, Clause F of the ToS gives BlockFi the right to transfer funds to customers’ wallets upon court request. Such a clause is usually reserved for bankruptcy situations or other financial matters involving the client, not the custodian itself.

Unless required by an applicable court order or applicable law, BlockFi will not sell, transfer, lend, pledge, or otherwise dispose of cryptocurrency stored in BlockFi Wallets unless specifically instructed to do so.”
Unlike non-custodial wallets, BlockFi wallets required users to log into the BlockFi app to access the digital assets stored there. However, customers had their access to the app revoked after the company suspended recording.

The customer was not given a private key. This meant that the account could not be imported into another wallet, such as MetaMask or Trust Wallet. The wallets served as cryptocurrency storage accounts for customers who did not want to be responsible for storing their original phrases.

The hearing date was set for January 9 for U.S. customers and January 13 for customers in other countries.