BlockFi, the crypto lender that filed for Chapter 11 bankruptcy in November, wants the court to authorize its conversion of trade-only assets into dollar-pegged stablecoins. The move would facilitate easy withdrawals from user accounts, in line with the firm’s ongoing efforts to return user funds.
In an Aug. 29 court filing with the U.S. Bankruptcy Court for the District of New Jersey, BlockFi sought permission from bankruptcy Judge Michael Kaplan to convert trade-only assets from user accounts into “withdrawable digital assets.”
The so-called trade-only assets include Alogrand (ALGO), Bitcoin Cash (BCH), Dogecoin (DOGE), which the firm says make up less than 0.5% of wallet assets in the U.S. However, BlockFi noted that its international entity separately holds additional trade-only assets like Cardano (ADA), Avalanche (AVAX), Polkadot (DOT), Filecoin (FIL) and Solana (SOL).
These assets are currently not available for withdrawal due to the fact that BlockFi’s custodian BitGo does not have the ability to facilitate blockchain transfers for these tokens with the current integrations to BlockFi’s platform.
In order to address this, BlockFi is seeking to make a one-time exchange of these tokens for the Gemini Dollar (GUSD) stablecoin, or another stablecoin of their choosing, to enable clients to withdraw these previously locked up assets.
Meanwhile, BlockFi and its Unsecured Creditors Committee (UCC) opened voting on its plan to end bankruptcy on Wednesday.
The two entities urged creditors to accept the plan, stating their belief that it was the “fastest way for clients to receive the highest recovery” in an email sent to BlockFi clients, along with instructions on how to submit their ballots. The deadline for voting on the plan has been set to 4:00 pm ET on Sept. 11.