A judge rules that $300M in BlockFi's wallets belong to clients, not the bankrupt lender's estate; $375M in interest-bearing accounts belong to the estate
Jack Schickler / CoinDesk :
Context & Ripple Effects
BlockFi's bankruptcy has been a running fight over who owns customer assets since its November 2022 filing revealed $671M lent to Alameda and $355M frozen on FTX. The new ruling draws a line inside BlockFi itself: roughly $300M held in wallets goes back to clients as their property, while $375M sitting in interest-bearing accounts is treated as estate collateral available to repay all creditors.
The decision matters because it lands on the opposite side of an earlier bankruptcy verdict: in January a judge ruled that deposits in Celsius Network's yield-bearing accounts belonged to Celsius, not individual holders. Together the two rulings are sketching out how US courts classify crypto customer holdings depending on what product they sit in.
First-order effects
- BlockFi's wallet clients are now legally entitled to their roughly $300M directly, rather than waiting as unsecured creditors of the estate.
- The estate gains a clear $375M pool from interest-bearing accounts to distribute among creditors still owed money after the FTX collapse.
Second-order effects
- Repayment progress strengthens BlockFi's hand elsewhere in the case: the SEC already agreed to defer $30M of the firm's $50M registration fine until investors are repaid, so faster client recoveries ease that obligation sooner.
- With wallet funds cleared for return, distribution logistics become the bottleneck — the Coinbase partnership for client withdrawals exists precisely because BlockFi must move client-owned assets without running its own platform.
Third-order effects
- If the pattern holds alongside the Celsius ruling, US bankruptcy courts will keep treating custody wallets and yield-bearing accounts as categorically different assets, pushing crypto lenders toward clearer product segregation — and making yield products riskier for depositors, who may rank behind other creditors.
- That classification pressure feeds into broader creditor-recovery mechanics like BlockFi's tentative FTX litigation settlement, where how much clients ultimately receive depends on both court rulings and claims against the failed trading firms.
The trend: US courts are establishing that crypto customers' bankruptcy recovery hinges on product structure, with self-custody-style wallets increasingly treated as client property while yield-bearing balances default to the estate.