BlockFi Inc. clients trying to recover nearly $300 million in cryptocurrency after the company froze transfers last year were not entitled to the digital assets, a judge ruled, passing on potential losses to investors holding interest-bearing accounts.
U.S. Bankruptcy Judge Michael Kaplan sided with the company and dismissed an objection from a group of customers who argued they retained rights to the coins before they were even transferred to a secure digital wallet. People who park assets in interest-bearing accounts give up some ownership that those in escrow accounts do not. To protect themselves during the freeze, users rushed to move coins to more secure digital wallets.
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