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Axios: Bankrupt Crypto Lender Wants To Return Deposits, But It’s Not That Simple

November 30, 2022

Cryptocurrency lender BlockFi, which filed for bankruptcy earlier this week, intends to file a motion requesting the continuation of platform withdrawals to refund its customers. Such a move would be “precedent-in-the-making for future crypto cases” because it concerns the order in which unsecured creditors would recover their funds. “There are precedents in a non-crypto exchange situation. The law is very clear,” said Evan Jones, a partner in the bankruptcy and restructuring group of O’Melveny & Myers LLP. Jones also noted that a regulated broker-dealer would be the first to receive funds because of the Securities Investor Protection Act (SIPA). “That law is developing with regard to crypto exchanges,” he said.

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