The crypto firm BlockFi announced it was filing for bankruptcy Monday, the latest domino to fall after FTX collapsed two weeks ago.
Filling for Chapter 11
The firm said it would focus its efforts on recovering all obligations owed to them, although FTX’s bankruptcy proceedings will delay its “recoveries.”
“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, the Company’s financial advisor.
The Company is filing with the Court several customary motions so as to ensure a smooth transition into Chapter 11. Additionally, a great deal of staff will be laid off at the crypto lender.
“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,” said Renzi.
Filed lawsuit against SBF’s
Bankman-Fried’s Emergent Fidelity Technologies vehicle was sued by BlockFi shortly after they filed for Chapter 11, demanding collateral that BlockFi says it owes.
According to the Financial Times, Bankman-Fried owns a 7.6% stake in Robinhood, an online trading app. The bankruptcy filing stated that BlockFi owed more than 100,000 creditors money.
As BlockFi’s largest creditor, Ankura Trust, a company that represents creditors in stressful situations, is owed $729 million, while FTX, the second-largest creditor, owes $275 million.
With around $257 million in cash on hand, BlockFi is confident that it will be able to weather a restructuring period with sufficient liquidity. According to the filing, the company estimates that its assets and liabilities are between $1 billion and $10 billion.
Moreover, the crypto community responded to this news with a wide range of comments and responses.
“AFTER FTX , CELSIUS AND VOYAGER NOW BLOCKFI HAS JUST FILED FOR BANKRUPTCY. WHO DO YOU THINK IS NEXT TO GO BANKRUPT?,” said Gurgavin, a crypto investor.
“The Entire Crypto Market Is Falling,” said another crypto user.
The Entire Crypto Market Is Falling
— BECKYREBECCA (@BECKY199357) November 28, 2022