Crypto Lender BlockFi Files for Bankruptcy

The filing indicates that the firm could have up to $10 billion in liabilities, as contagion from FTX spreads.Author:BtcCaseyPublish date:Nov 28, 2022The filing indicates that the firm could have up to $10 billion in liabilities, as contagion from FTX spreads.BlockFi has filed for chapter 11 bankruptcy, according to a press release.The lending platform is the latest victim of contagion within the industry that originated with the collapse of the cryptocurrency exchange FTX.According to the filing, BlockFi has over 100,000 estimated creditors and an estimated $1-10 billion in liabilities. According to the filing, the firm has $256.9m cash in its hands. On Twitter, BlockFi released a statement explaining that the firm will be focusing on recovering all obligations owed by BlockFi counterparties, including FTX. This is our top priority and continues to guide our journey forward. We will continue to communicate directly with our clients as Chapter 11 is transparent. This filing is another example of lenders that have been facing insolvency recently, following the industry-wide collapse. According to Decrypt, BlockFi will be laying off a large portion of its staff as part of the bankruptcy proceedings. Celsius filed for bankruptcy in July. Genesis stopped withdrawals just recently. BlockFi was rescued by FTX in June 2022 after the contagion caused by the collapse of Three Arrows Capital’s cryptocurrency hedge fund. It was quickly acquired by FTX. Questions about BlockFi’s ability and ability to protect customer assets surfaced after the implosions of FTX, Alameda Research, and the Alameda Research hedge funds. These questions only grew after BlockFi stated that they didn’t have any further information on the situation around FTX. They also began limiting customers’ access to their platform and halting withdrawals. BlockFi posted additional resources to customers who have questions about the proceedings in a blog post. Tagsterms:BankruptcyContagionBlockfi

 

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