Chat with us, powered by LiveChat

BlockFi Is The Latest Crypto Firm to File For Bankruptcy After FTX Collapse

Derek Wolfe

Updated: November 28, 2022

blockfi bankruptcy
Editor’s Note:

EDITOR'S NOTE: And the dominoes continue to fall. The latest casualty is crypto firm BlockFi, a crypto lending firm that filed for bankruptcy in the US following the FTX collapse. BlockFi had significant exposure to FTX and is one of potentially many that are likely to be impacted, if not rendered insolvent, by the now-defunct exchange. The FTX debacle has shaken trust in the crypto markets, drawing ire among crypto investors and scrutiny from governments and regulators. It’s still too early to say, but it appears as if the crypto winter is turning out to be more of an ice age.

The troubled crypto firm BlockFi has filed for bankruptcy in the US, as the dramatic collapse of FTX continues to reverberate across the industry.

The company had already halted most activity on its platform, citing "significant exposure" to FTX.

BlockFi said it was seeking court protection to restructure, settle its debts and recover money for investors.

BlockFi had received a rescue deal from FTX earlier this year as the values of cryptocurrencies plunged.

But FTX, a crypto exchange, ran into its own problems this month, as people rushed to pull money from the platform amid doubts about its finances.

Former boss Sam Bankman-Fried, the so-called "crypto king", resigned and the firm declared bankruptcy.

The collapse has shaken faith in the crypto industry and drawn scrutiny from regulators.

BlockFi, which offered loans and other financial services backed by borrowers' crypto assets, described the collapse of FTX as "shocking".

In a court filing, New Jersey-based BlockFi said it owed money to more than 100,000 creditors. It listed crypto exchange FTX as its second-largest creditor, with $275m owed on a loan extended earlier this year.

It also owes $30m to the US financial regulator, the Securities and Exchange Commission, which earlier this year found the firm had failed to properly register its products and misled the public about the risk levels in its loan portfolio and lending activity.

BlockFi said the Chapter 11 bankruptcy filing would allow the firm to develop a "reorganization plan that maximizes value for all stakeholders, including our valued clients".

The company said it had almost $257m in cash on hand.

"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 Mark Renzi of Berkeley Research Group, the company's financial advisor.

Founded in 2017, BlockFi had promoted itself as building a bridge between cryptocurrencies and traditional financial products.

It has won hundreds of millions of investment from big-name tech investors, including Bain Capital Ventures and Tiger Global, in recent years. Last year, as crypto values soared, it said it managed more than $15bn in assets.

It is not the only firm to be hit after cryptocurrency prices plunged earlier this year. The value of the most well-known digital currency, Bitcoin, dropped from more than $64,000 a year ago to less than $20,000 in June.

Celsius Network and Voyager Digital are among the other firms that have also filed for bankruptcy.

Originally published on BBC News.

No Investment Advice

GSI Exchange is a publisher and precious metals retailer. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You understand that the Content on the Site is provided for information purposes only, and none of the information contained on the Site constitutes an offer, solicitation or recommendation to buy or sell a security. You understand that the GSI Exchange receives neither monetary or securities compensation for our services. GSI stands to benefit from the sell of retail cost precious metals on this site. To avoid hidden costs all prices are listed live 24/7 on this site. Read the full disclaimer

GSI Exchange Infokit - evergreen

GET YOUR FREE

GOLD SILVER INFO KIT

Precious Metals and Currency Data Powered by nFusion Solutions