Cryptocurrency lender BlockFi has been granted permission to return $297 million to customers who have deposits in its wallet program, according to Reuters. This does not apply to users of interest-bearing accounts (BIA), however, as those funds were used by BlockFi for its lending business and are now considered property of the bankruptcy estates.

This court decision follows BlockFi's Chapter 11 bankruptcy protection filing in late November of last year. This followed the collapse of FTX, and speculation of the lender's financial wellbeing. At that time, BlockFi had approximately $256.9 million in liquidity and was facing a $30 million debt with the Securities and Exchange Commission.

Currently, BlockFi is attempting to sell its crypto mining equipment and $160 million in Bitcoin (BTC)-backed loans to repay its creditors—a total of over 100,000, with an estimated cumulative debt of $10 billion. A bankruptcy exit plan should be submitted by May 15, and BlockFi is exploring alternatives such as a sale of assets or external backer to support a restructuring deal.

The judge's decision not to return funds to users who have transactions to wallet accounts, is due to BlockFi's terms of service, which entitle the lender to block transaction requests during a shutdown. During this period, 48,000 users attempted to transfer $375 million to wallet accounts, although their requests were blocked in the backend, causing confusion.

Cryptocurrency-related regulation has become increasingly important in the eyes of industry experts. In the United States, the Securities and Exchange Commission chairman Gary Genser is expected to have a large soverignty in overseeing the regulatory landscape of the cryptocurrency industry. He is advocating for protective consumer measures, as well as making sure untrustworthy companies cannot take advantage of investors.



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