digital wallet

BlockFi files motion to return frozen crypto to wallet users

Crypto lender BlockFi has asked a U.S. bankruptcy court for the authority to return the crypto held in BlockFi wallets to users.

Bankrupt crypto lending platform BlockFi has filed a motion requesting authority from a United States bankruptcy court to allow its users to withdraw digital assets currently locked up in BlockFi wallets.

In a motion filed on Dec. 19 with the U.S. Bankruptcy Court in the District of New Jersey, the lender asked the court for authority to honor client withdrawals from wallet accounts that have been frozen on the platform since Nov. 10.

The court documents also request permission to update the user interface to properly reflect transactions as of the platform’s pause.

In a widely shared email sent to affected users, BlockFi called the motion an “important step toward our goal of returning assets to clients through our chapter 11 cases,” adding:

“It is our belief that clients unambiguously own the digital assets in their BlockFi Wallet Accounts.”

According to BlockFi, this motion will not impact withdrawals or transfers from BlockFi Interest Accounts, which remain paused at this time.

The lending platform has also signaled intentions to seek “similar relief from the Supreme Court of Bermuda with respect to BlockFi Wallet Accounts held at BlockFi International Ltd.”

BlockFi International is a subsidiary of the company based in Bermuda, which runs its non-U.S. operations.

Crypto blogger Tiffany Fong shared the communication sent to her by BlockFi on Dec. 19, commenting that the embattled firm appears to be moving much faster than Celsius, which filed for bankruptcy over five months ago , compared to BlockFi’s bankruptcy filing in November.

WOW, @BlockFi has already filed a motion requesting client withdrawals for assets held in BlockFi Wallet Accounts. S/O to BlockFi for moving exponentially more quickly than @CelsiusNetwork in Ch 11. pic.twitter.com/JvtWzMklNA

— Tiffany Fong (@TiffanyFong_) December 20, 2022

According to the court documents, a hearing to decide if the motion will be granted is scheduled for Jan. 9.

A separate hearing regarding wallet accounts held at BlockFi International Ltd is scheduled to go before the Supreme Court of Bermuda on Jan. 13.

BlockFi halted client withdrawals and requested clients not to deposit to BlockFi wallets or Interest Accounts on Nov. 11, citing a lack of clarity around FTX.

By Nov. 28, BlockFi filed for Chapter 11 bankruptcy, for the company and its eight subsidiaries. BlockFi International filed for bankruptcy with the Supreme Court of Bermuda on that same day.

Israeli court rules authorities can seize crypto in 150 blacklisted wallets

Over 150 crypto wallets blacklisted for alleged links to the funding of terror groups can now be drained of all funds following a ruling by an Israeli court.

Tel Aviv’s Magistrate Court has reportedly issued a ruling allowing Israel’s government to seize all the crypto in more than 150 digital wallets that it has blacklisted for allegedly funding terrorist groups.

According to a Dec. 18 local Israeli media report, Israeli Defense Minister Benny Gantz says the court’s Dec. 15 ruling has already allowed authorities to seize a further $33,500 from digital wallets linked to the Islamist militant group Hamas.

Prior to the court ruling, Israeli authorities had only been legally allowed to seize digital assets with direct links to terrorist activity but not additional funds in the same wallets. In December 2021, authorities seized $750,000 from the wallets.

The de facto ruling authority of Palestine’s Gaza Strip since 2007, Hamas is classified as a terrorist organization in whole or in part by several countries and international blocs including the United States, European Union, Israel and the United Kingdom.

Starting in January 2019, Hamas began appealing to its supporters to send funds using Bitcoin (BTC) as a means to combat sanctions and financial isolation.

Gantz signed an order on July 9, 2021, authorizing security forces to seize crypto accounts with alleged ties to the militant wing of Hamas.

Authorities disclosed at the time the accounts contained Tether (USDT), Ether (ETH), Dogecoin (DOGE), XRP (XRP), Binance Coin (BNB), Zcash (ZEC), Litecoin (LTC) and other altcoins.

In Februa, 30 crypto wallets from 12 exchange accounts linked to Hamas were seized by Israeli authorities as well.

The exact value of the crypto assets seized was not publicly revealed.

Crypto has been shown to have a relatively minor role in fundraising for terrorist groups. Early in 2022, blockchain analytics firm Chainalysis determined only a small portion of crypto funds are used in criminal activity.