Bankrupt lender, BlockFi, files to convert ‘trade-only’ tokens into stablecoins

BlockFi, the now-defunct crypto lending company, has filed a court application to move “trade-only” assets from users’ accounts to stablecoins.

This move follows the company’s ongoing efforts initiated in August to return users’ funds after previously closing withdrawals.

BlockFi filed an application on Aug. 29 to the United States Bankruptcy Court for the District of New Jersey to authorize the conversion of trade-only assets into stablecoins, including Algorand’s native token (ALGO), Bitcoin Cash (BCH), and Dogecoin (DOGE). 

Since these assets can’t be withdrawn easily, BlockFi is proposing a one-time exchange for Gemini Dollar (GSD) or a similar stablecoin. However, it is worth noting that this suggestion comes separate from the other trade-only assets that were available on the platform, including Cardano (ADA), Solana (SOL) and Avalanche (AVAX), which are held by BlockFi International.

The application goes on to state that trade-only assets currently do not exceed 0.5% of US wallet assets held by BlockFi users.  

Last year, BlockFi became one of several companies that sought Chapter 11 bankruptcy protection in the US, along with FTX, Celsius Network and Voyager Digital.

In November 2022, the platform temporarily stopped clients from withdrawing funds, with estimates suggested that BlockFi owed up to $10 billion to over 100,000 clients, including $1 billion to its three largest creditors.

On Aug. 16, the court authorized the company to open withdrawals nine months later. However, the timeline for international users remains uncertain due to ongoing legal proceedings, which could potentially change the situation.

Therefore, much of the community remains on watch as developments in the case unfold.