BlockFi files for bankruptcy as fallout from FTX spreads

This illustration photo taken on November 14, 2022 in Krakow, Poland shows the BlockFi logo and a representation of cryptocurrency displayed on a mobile phone screen.

Jakub Poldsky | Nurphoto | Getty Images

Troubled cryptocurrency firm BlockFi has filed for Chapter 11 bankruptcy protection in U.S. bankruptcy court in the state of New Jersey following the collapse of putative acquirer FTX.

In filings, the company said it has more than 100,000 creditors, with liabilities and assets ranging from $1 billion to $10 billion.

In the filing, the company listed an outstanding $275 million loan to FTX US, the US arm of Sam Bankman-Fried’s now-bankrupt empire.

Like FTX, BlockFi also has a Bahamian subsidiary. The subsidiary filed for bankruptcy in the Bahamas at the same time as the U.S. filing.

BlockFi’s bankruptcy filing revealed that the company’s largest disclosed client had a balance of nearly $28 million.

“BlockFi expects a transparent process that produces the best possible outcome for all clients and other stakeholders,” Mark Renzi of Berkeley Research Group said in a press statement. BRG acted as BlockFi’s financial advisor.

Cryptocurrency companies that provide transaction exchange and interest-bearing custody services for cryptocurrencies, It is one of many companies facing serious liquidity problems after Sanjian Capital imploded.

The Jersey City, New Jersey-based firm has stopped withdrawing customer deposits and acknowledged it had “significant exposure” to now-defunct cryptocurrency exchange FTX and its sister trading firm Alameda Research.

“We do have significant exposure to FTX and affiliated entities, including debt owed to us by Alameda, assets held by, and undrawn amounts on our credit facility at FTX.US,” BlockFi previously stated .

Within days of FTX filing for bankruptcy protection, the company began talks with restructuring professionals, according to people familiar with the matter.

Representatives for BlockFi did not immediately respond to a request for comment.

BlockFi, which was recently valued at $4.8 billion according to PitchBook, is one of many crypto companies feeling the pinch of FTX’s collapse. In July, FTX stepped in to help BlockFi avoid bankruptcy, providing a $400 million revolving line of credit and offering to potentially buy the struggling lender.

Sam Bankman-Fried’s cryptocurrency exchange FTX filed for Chapter 11 bankruptcy protection in the United States on Nov. 11. On the 11th, the contagion effect of the cryptocurrency industry spread rapidly.

About 130 other affiliates are involved in the proceedings, including Bankman-Fried’s crypto trading firm Alameda Research and the firm’s U.S. subsidiary, FTX’s new CEO, John Wray, said in a filing in Delaware bankruptcy court that “in his 40 years of legal and restructuring experience,” he had never seen “such a complete failure of corporate control, and Complete lack of credible financial information” Gentlemen. “

Wray served as CEO of Enron after the energy giant imploded.

Within days, FTX’s valuation went from $32 billion to bankruptcy as liquidity dried up, customers demanded withdrawals, and rival exchange Binance reneged on a non-binding agreement to acquire the company. The gross negligence has since been exposed. Ray added that a “substantial portion” of assets held by FTX could be “lost or stolen.”

According to the latest bankruptcy filing, FTX may have more than 1 million creditors, suggesting that its collapse has had a huge impact on cryptocurrency traders and other counterparties connected to the Bankman-Fried empire.

This is a developing story.

Source link