The Big Win for Wallet Program Users
A U.S. judge recently gave a thumbs up for BlockFi to return a whopping $297 million to customers involved in the Wallet program. This decision is a huge sigh of relief for those who had deposits tied up and were watching their crypto funds float away faster than they could say “blockchain.” However, BlockFi Interest Account (BIA) users, don’t get too excited just yet—this doesn’t apply to you!
Understanding the Differentiation: Wallet vs. BIA
In the grand scheme of things, the Wallet program was never designed to serve as an interest-earning scheme. Unlike the BIA accounts, where your funds were practically taking part in BlockFi’s lending business fiesta, the Wallet was only for good old-fashioned storage—no interest, no frills. As a result, Judge Michael Kaplan ruled that funds in BIA accounts are considered part of the bankruptcy estate, meaning they’ll be funneled toward paying back creditors instead. Talk about a financial twist!
The Great Transfer Debacle
Here’s where it gets sticky: almost 48,000 BlockFi customers scrambled to transfer around $375 million from their BIA accounts to the Wallet program on November 11—after BlockFi hit the brakes when FTX collapsed. Unfortunately for them, although the front-end application seemed to allow these transfers and even provided friendly email confirmations, the transactions were stymied on the back-end. Oops!
Legal Battles and Customer Frustration
Lawyers representing the aggrieved customers insisted that BlockFi should dish out refunds for these attempted transfers, arguing that confusion was the name of the game. But Judge Kaplan was having none of it. He pointed to BlockFi’s terms of service granting them the prerogative to halt transactions during the chaos. Essentially, the court said,
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