Now bankrupt crypto lending firm BlockFi has taken an important step towards making it easier for users to return their funds. The platform has filed a lawsuit to have “trade-only” assets in user accounts converted to stablecoins, thus aiming to enable smoother withdrawals.

The company started this process in August and recently filed in the United States Bankruptcy Court for the District of New Jersey. The purpose of the application is to authorize the conversion of “trade-only” assets such as Algorand’s native token, Bitcoin Cash and Dogecoin into stablecoins such as the Gemini Dollar (GUSD). This step aims to facilitate the withdrawal process for users with assets that are difficult to withdraw.

The filing states that “trade-only” assets account for less than 0.5% of all US wallet assets of BlockFi users. While assets such as Cardano, Solana, Avalanche, and others are included in the “trade only” category, they are managed separately by BlockFi International.

Getting BlockFi to this point has been a journey through several challenges, including filing for Chapter 11 bankruptcy protection in 2022. At the time, filing for bankruptcy put BlockFi in the same group as controversial crypto exchanges such as FTX, Celsius Network, and Voyager Digital. After a period of blocked withdrawals, the court granted permission to restart filming on August 16, 2022, after a 9-month hiatus.

The court also granted conditional approval to BlockFi’s restructuring plan, which revolves around fundraising from various organizations including Alameda Research, FTX, Three Arrows Capital, Emergent, and Core Scientific.

In the process, BlockFi’s legal team defended FTX’s attempts to withdraw large sums to meet its obligations. As of April 2023, BlockFi’s estimated debt was around $10 billion spanning over 100,000 creditors. The debt includes a substantial amount of debt to its three largest creditors and a substantial amount to troubled crypto hedge fund 3AC.