November 28, 2022

BlockFi Files for Chapter 11 Bankruptcy Following FTX

BlockFi

BlockFi

BlockFi, a US cryptocurrency platform, filed on Monday for Chapter 11 bankruptcy protection along with eight affiliates in a New Jersey court, a new casualty aftermath of the collapse of FTX earlier this month, according to CNBC.

In the filing, the New Jersey-based company said it owes money to about 100,000 lenders in addition to possessing assets and liabilities ranging between one billion to $10 billion. The bankruptcy filing showed that BlockFi’s largest creditor is Ankura Trust, which is owed $729 million.

According to the filing, FTX, which filed for Chapter 11 bankruptcy, was the second-largest creditor to BlockFi with $275 million owed on a loan extended earlier this year. Valar Ventures, a Peter Thiel-linked venture capital fund, possess 19% of BlockFi equity shares.

In a blog, BlockFi attributed its move to the shocking events surrounding FTX and associated corporate entities over the past period, adding the filing for bankruptcy will enable BlockFi to stabilize the business and give the opportunity “to consummate a reorganization plan that maximizes value for all stakeholders.”

BlockFi has a subsidiary in the Bahamas, like FTX, which also moved for bankruptcy with the American one. According to PitchBook, BlockFi was last valued at $4.8 billion.

In a statement, Mark Renzi of Berkeley Research Group, BlockFi’s financial advisor, said: “BlockFi looks forward to a transparent process that achieves the best outcome for all clients and other stakeholders.”

Earlier, BlockFi paused withdrawals from its platform, saying it had “significant exposure” to FTX and its associated entities, including “obligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX.US”

FTX, once valued at $32 billion, collapsed in a matter of days after the CEO of Binance, a rival firm, said his exchange would liquidate its FTT tokens, a matter that led to the plunge of FTT value. FTX filed for Chapter 11 bankruptcy on November 11.

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