A US judge rules that nearly $300M in BlockFi's wallets belong to clients, not the bankrupt lender's estate; $375M in interest-bearing accounts is the estate's
Jack Schickler / CoinDesk :
Context & Ripple Effects
The ruling draws a line between BlockFi wallet balances and its interest-bearing accounts, a distinction that directly shapes which claimants can recover from each pool. It contrasts with the earlier Celsius ruling on yield-bearing deposits, where those deposits were held to belong to the lender's estate.
BlockFi's insolvency had already exposed customers to wider counterparty losses, including its reported lending exposure to Alameda and funds frozen on FTX in the initial bankruptcy hearing. This decision narrows one central ownership dispute within that unwind.
First-order effects
- Wallet customers gain a court-recognized claim to nearly $300M outside BlockFi's estate, while holders of interest-bearing accounts must look to the estate for recovery from the $375M pool.
- BlockFi's bankruptcy administrators must treat the two account types differently in distributions, rather than pooling their assets for all creditors.
Second-order effects
- The split increases the practical importance of account terms and custody structure for crypto-lending customers: wallet and yield products can produce materially different outcomes in insolvency.
- Other failed lenders and their creditors gain another case-specific reference point, alongside the Celsius yield-account decision, when contesting whether deposited crypto is customer property or estate property.
Third-order effects
- If courts continue to distinguish custody from yield products, crypto platforms will face stronger pressure to make title, rehypothecation, and bankruptcy treatment explicit in product design and disclosures.
- The divergent BlockFi and Celsius outcomes suggest that bankruptcy risk in crypto lending will be determined less by the label “account” than by the underlying contractual and operational arrangement.
The trend: Crypto bankruptcies are turning customer-asset ownership and account design into a central fault line between custody services and yield-bearing products.