Crypto lender BlockFi filed for bankruptcy protection Monday, indicating it hoped to restructure, continuing operations in the meantime.
Another crypto giant has filed for Chapter 11 bankruptcy protection in the US. The Bitcoin lender’s problems started earlier this year when the bear market got worse, particularly following the Terra crash. A few months later, FTX offered a lifeline when it gave BlockFi a $400 million loan and the option to buy the firm for up to $240 million in the future.
However, a fresh wave of issues emerged as a result of the once-SBF-led giant’s stunning fall earlier this month. Several rumors that BlockFi was considering bankruptcy filing surfaced, although firm representatives first denied them.
Yet, the crypto lender has indeed filed for Chapter 11 bankruptcy protection in a New Jersey court, as reported by CNBC.
BlockFi’s management estimated the firm has more than 100,000 creditors, and they marked off the ranges in the petition for the company. According to executives, the company’s assets and liabilities range from $1 billion to $10 billion.
The Securities and Exchange Commission (SEC), which has a $30 million unsecured claim, and West Realm Shires Inc., the corporate name of FTX US, which has a $275 million unsecured claim, are the major debtors of the corporation. The identities of the bulk of the remaining top 50 creditors were not disclosed.
According to the company’s petition, BlockFi’s executives estimate the company has more than 100,000 creditors, and checked off the ranges. Executives estimate the company has between $1 billion and $10 billion in both assets and liabilities.
The company’s largest creditors include West Realm Shires Inc., the legal name for FTX US, which has a $275 million unsecured claim, and the Securities and Exchange Commission (SEC), which has a $30 million unsecured claim. The majority of the other top 50 creditors’ names were not shared.
BlockFi Sues Bankman-Fried Over Robinhood Shares
The troubled crypto lender has sued Sam Bankman-Emergent Fried’s Fidelity Technologies company shortly after seeking Chapter 11 bankruptcy protection.
BlockFi blamed its exposure to FTX and Alameda for its insolvency, claiming the latter had defaulted on a $680 million secured loan in early November, just as SBF’s empire was beginning to crumble.
According to the lawsuit, on November 9 an agreement was made between BlockFi and Emergent Fidelity Technologies to guarantee repayment by an unknown borrower in exchange for the collateral of an undisclosed common stock. According to the Financial Times (FT), who cited court correspondence, the borrower was Bankman-Alameda Fried’s Research.
According to two persons with knowledge of the situation, Bankman-Fried continued to try to sell his Robinhood shares after signing into the collateral arrangement with BlockFi while trying to raise money before FTX’s bankruptcy. The broker who really refused to transmit the collateral to the cryptocurrency lender was named in the most recent complaint by BlockFi as ED&F Man Capital Markets.