BlockFi Files For Bankruptcy
- BlockFi still owes the S.E.C. $30 million, making the S.E.C. its fourth-largest creditor.
- BlockFi also owes $275 million to West Realm Shires.
- The crypto lender joins FTX, Voyager, and Celsius to file for bankruptcy.
Crypto lender BlockFi has joined the list of blockchain platforms to file for bankruptcy in what has been a turbulent year for the broader crypto market. BlockFi announced on Monday that it had filed for Chapter 11 bankruptcy along with eight affiliates. The company made the filing in a New Jersey court as crypto prices continue to decline.
BlockFi’s decision comes as no surprise to many. The company’s future has been in doubt since FTX filed for bankruptcy. In its court filing, the bankrupt lender listed FTX as its second-largest creditor. BlockFi was one of the crypto platforms that rose to prominence during the last bull run. The platform claimed that it had more than 450,000 retail customers in 2021.
The crypto lender promoted itself particularly to small investors, providing them with accounts that paid high interest on cryptocurrency deposits as well as quick loans backed by cryptocurrencies without credit checks. BlockFi’s collapse raises huge concerns about the crypto industry where companies are so linked that even a small shake can cause financial havoc.
Several cryptocurrency companies, including FTX and BlockFi, have declared bankruptcy in recent months. Celsius Network and Voyager Digital filed for bankruptcy within a week of each other in July. Both platforms were victims of a major market panic that saw the value of many well-known cryptocurrencies crash to new lows. Both Celsius and Voyager had difficulty getting back on track.
BlockFi has struggled for stability since then and reached an agreement with FTX in June to secure itself. The deal with FTX was considered a safety net for the lender given that FTX held the market as one of the key players. FTX offered to provide BlockFi with a $400 million credit line, which the lender could use as needed.
BlockFi, in its bankruptcy filing, said it had $257 million in cash on hand to help it keep going during the bankruptcy. In court documents, the crypto lender claimed to have more than 100,000 creditors and $10 billion in assets and liabilities. Additionally, it promised to drastically cut costs overall, including labour.
BlockFi also said that it would concentrate on collecting any obligations owed to it, including those owed by FTX. However, given FTX’s bankruptcy, BlockFi warned of possible delays in recouping assets from the exchange.