Tech
Cryptolender BlockFi follows FTX into bankruptcy
Cryptolender BlockFi follows FTX into bankruptcy
Another cryptocurrency exchange has filed for bankruptcy. BlockFi and eight affiliates filed for bankruptcy protection in New Jersey, joining fellow crypto lenders Celsius Network and Voyager Digital in Chapter 11.
“This action follows the shocking events surrounding FTX and associated corporate entities and the difficult but necessary decision we made as a result to pause most activities on our platform,” the Jersey City-based company said on its blog.
![FTX logo and cryptocurrencies](https://citynewsng.com/wp-content/uploads/2022/11/81601d3069d0916e49ba4e7d6f4db212.webp)
BlockFi owes $275 million to FTX, the company’s second-largest creditor due to a loan extended earlier this year.
In June, FTX signed a deal giving Sam Bankman Fried’s former company an option to buy BlockFi for as much as $240 million. The agreement included a $400 million credit facility.
“With the collapse of FTX, the BlockFi management team and board of directors immediately took action to protect clients and the company,” said Mark Renzi of Berkeley Research Group, BlockFi’s financial adviser. “From inception, BlockFi has worked to positively shape the cryptocurrency industry and advance the sector. BlockFi looks forward to a transparent process that achieves the best outcome for all clients and other stakeholders.”
Ankura Trust is the largest creditor. It serves as trustee for BlockFi’s interest-bearing accounts. It’s owed $729 million.
BlockFi also owes the Securities and Exchange Commission $30 million. In February, the company agreed to pay $100 million for failing to register the offers and sales of its retail crypto lending product.
BlockFi currently anticipates that client claims will be addressed through the Chapter 11 process.
Platform activity continues to be paused at this time. However, the company will file a series of customary motions to allow for the continued operation of its business.
BlockFi says it has explored every strategic option and available alternative for its business since the pause while remaining laser-focused on its primary objective of doing the best for clients.
“These Chapter 11 cases will enable BlockFi to stabilize the business and provide BlockFi with the opportunity to consummate a reorganization plan that maximizes value for all stakeholders, including our valued clients,” the company said.
“Rest assured, we will continue to work on recovering all obligations owed to BlockFi as promptly as practicable.”
BlockFi has $256.9 million in cash on hand, which is expected to provide sufficient liquidity to support certain operations during the restructuring process.
In parallel with these chapter 11 cases, BlockFi International Ltd., a Bermuda-incorporated company, filed a petition with the Supreme Court of Bermuda for the appointment of joint provisional liquidators.
BlockFi was founded in 2017 by Zac Prince and Flori Marquez. The platform was created to provide credit services to markets with limited access to simple financial products.
Reuters contributed to this report.
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