In a turn of events, cryptocurrency lender BlockFi edges closer to moving past its Chapter 11 woes. The lender has announced that a New Jersey Bankruptcy court has provided conditional approval for its disclosure statement. Encouraging all eligible parties to vote in favor of accepting their proposed plan by the deadline on September 11, 2023, the lender can then commence client fund recovery.
However, some might view this as a cloudy proposition. This plan will not only resolve the Chapter 11 cases but will also provide the lender with resources to concentrate efforts on recovering funds from other defunct firms such as Alameda, FTX, and Emergent among others. While this aims to optimize recoveries for clients, it presents the possibility of diluting client assets, primarily due to third party claims.
In a light at the end of the tunnel scenario, the plan offers clients relief, except in cases where they withdrew $250,000 or more from their accounts, after November 2, 2022. Whereas BlockFi will not reclaim amounts less than $250,000, some clients are offered a one-time cash distribution from BlockFi Estate.
Another point in favor signifies the United States Securities and Exchange Commission (SEC) consenting to delay the collection of a $30 million fine until creditors are fully repaid. A lingering uncertainty persists. While it’s a win for the creditors, the question remains if these actions will put the lender back on a stable footing or are just delaying an inevitable downfall?
Meanwhile, across the globe, Hong Kong expands its cryptocurrency trading exposure to individual investors. City-based digital asset firm HashKey has secured the necessary licenses to expand its services to retail users. Swimming against the tide of uncertain regulatory landscape, this marks a significant step.
Reactions to this development are mixed. Branching out from professional to individual retail users might potentially open the market to a broader audience, thus, indirectly boosting the assets’ legitimacy. Conversely, some might argue that more extensive regulation in the retail sector might cause firms to look for markets with more lenient regulations.
Blockchain technology and cryptocurrency trading continue to make waves in the financial world, prompting both excitement and caution. As the narrative unfolds, let’s not forget, risks and rewards often come hand in hand.
Source: Cointelegraph
