Recently, BlockFi filed a motion with the U.S. Bankruptcy Court in the District of New Jersey. The main task is that customers can be allowed to withdraw their crypto from the exchange.
This happened on December 19, although the hearings for US-based customers won’t happen until January 9. Other clients will have to wait until January 13 for hearings from BlockFi International.
We don’t yet know if this re-opening of halted withdrawals will actually work. The idea of bankruptcy is that nobody can access the money and that a third party decides fairly how to distribute any remaining funds to creditors. At the same time, most deposits with any exchange (or bank!) are simply “claims on funds.”
This begs the question:
Celsius made a similar filing for opening halted withdrawals way back in September. They stated in the same way that user funds were the property of the users.
Therefore they should have the right to withdraw up to $7,575 of crypto as it did not belong to the exchange and should not be included in the bankruptcy filing.
This type of structure kind of stinks, as their “custody and withhold” program defines all assets as belonging to the customer. It’s not just up to this seemingly made-up number of $7,575.
Not surprisingly, we’ve been waiting over 3 months for progress on this, and nothing seems to have happened. However, we will be keeping an eye on this in case there is a chance for users to get their funds back as soon as possible.
We got an update on December 1 stating that, among other things, Japanese customer cash and cryptocurrency belong to the customers as their property. And, therefore, cannot be included in bankruptcy proceedings in the U.S.
Time will tell whether there are any funds available or withdrawals will remain halted. But hey, if you can log in and get your crypto out while you’re able to, then you should make the most of this early Christmas present if you can.
Like every other exchange that has gone on to fail, Gemini and its parent company DCG have blamed their woes on “liquidity issues.”
And, like every other exchange that’s been in the news, it says if they can keep trading, they can fix their liquidity problems. Eventually, it means letting users get their funds out.
According to an update on December 20, Gemini now has “a plan” to fix these liquidity problems and finally open long-halted withdrawals. Their key problem seems to be some long-dated loans that won’t pay out for another few months.
On the face of things, the way Gemini and DCG are structured here, it’s entirely possible that they can do this.
If their proposed plan comes to fruition, then it’s likely that Gemini could actually carry on operating. Yet, we’re sure any of you with funds on there would want to get them off at the first opportunity.
All of these exchanges have totally different problems. There’s no way to predict which ones will actually re-open halted withdrawals again. We cannot know how many users will be able to access their funds.
Or is this a small window of opportunity that only the fast and attentive will be able to use?
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