Skip to content

BlockFi files for bankruptcy as the crypto lender succumbs to the contagion of the FTX collapse

In this photo illustration, the cryptocurrency exchange trading platform Blockfi logo is seen on an Android mobile device screen with the currency of the United States dollar icon.
BlockFi co-founder and SVP of operations Flori Marquez opened up about what’s next for the company and the crypto industry at Empire Startups Fintech Conference on Tuesday.

Chukrut Budrul/ SOPA Images/ LightRocket/ Getty Images

  • Cryptocurrency lender BlockFi filed for Chapter 11 bankruptcy protection on Monday.
  • Earlier this year, BlockFi received a $400 million credit line from FTX.
  • The company said it will continue to pause withdrawals and customer deposits on its platform. 

Cryptocurrency lender BlockFi filed for Chapter 11 bankruptcy protection on Monday, marking more fallout from the implosion of Sam Bankman-Fried’s once-$32 billion crypto empire.

The filing, which was first reported by Decrypt, was later confirmed in a Blockfi press release that said the company has $256.9 million in cash on hand and is "expected to provide sufficient liquidity to support certain operations during the restructuring process."

"BlockFi looks forward to a transparent process before the court that achieves the best outcome for all clients and other stakeholders," the company said.  

BlockFi has over 100,000 creditors, with one of the largest being "West Realm Shires," the company publicly known as FTX.US, which has a $275 million unsecured claim.

According to the bankruptcy filing, BlockFi has more than 100,000 creditors, with liabilities and assets of $1 billion-$10 billion.

The company allows users to earn yield for depositing their tokens, but previously faced liquidity issues after the downfall of now-defunct hedge fund Three Arrows Capital and bankrupt centralized lender Celsius. In July, the company signed a deal with FTX to obtain a $400 million revolving credit facility. 

BlockFi, however, had "significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at, and undrawn amounts from our credit line with FTX.US," the firm previously said.

After FTX filed for bankruptcy on November 11, BlockFi announced that it would pause withdrawals and customer deposits on its platform.

"With the collapse of FTX, the BlockFi management team and board of directors immediately took action to protect clients and the company," Mark Renzi of Berkeley Research Group, the company’s financial advisor, said in a statement on Monday.

Read the original article on Business Insider

Business Insider