BlockFi, a crypto lending firm, has submitted a bankruptcy filing. The crypto platform has become another victim of the contagion triggered by the decline of FTX of Sam Bankman-Fried. BlockFi declared formerly this month to have frozen withdrawals because of considerable exposure to Bankman-Fried’s crypto empire. This takes into account the crypto exchange FTX and Alameda (a hedge fund affiliated with FTX). Earlier, Turkey also announced the launch of a probe into the matter of FTX.
FTX Contagion Compels another Crypto Entity ‘BlockFi’ to File for Bankruptcy
Alameda, FTX, and several other associated entities submitted their bankruptcy filing on the 11th of November this year. In its statement, the firm stated that since the halt its team has delved into the possible strategic options that could be substitutive availabilities. As per it, the platform has put minor attention to its chief goal of facilitating the users. Soon following the bankruptcy filing, a lawsuit was additionally submitted by BlockFi against the Emergent Fidelity Technologies vehicle of Bankman-Fried.
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With this, BlockFi demanded the turnover collateral owed to it by Bankman-Fried. This equals a stake of up to 7.6% in Robinhood (an online trading platform). The company was established in 2017 on the behalf of Zac Prince as well as Flori Marquez. It offered loans to its consumers in crypto assets in the form of collateral. BlockFi mentioned in the bankruptcy filing that more than 100,000 creditors have lent it funds.
BlockFi Still Possess $275M for Restructuring Plan
The biggest creditor within the respective list is Ankura Trust (the firm denoting the creditors in strained situations) with an amount of $729M. Apart from that, the 2nd biggest creditor of BlockFi is FTX with up to $275M. At present, approximately $257M is in the hands of the company as it expects to offer considerable liquidity for its restructuring strategy. The firm anticipates up to $1B to $10B in liabilities and assets, as noted in the filing.
In its restructuring plan, layoffs will also be included. No clarification was given about the number of employees to be dismissed. However, the firm brought to the front that it had started an internal strategy to minimize the expenses, taking into account labor costs. Shortly after the crash of FTX, the lending branch of Genesis (a crypto brokerage firm) suspended redemptions. It additionally halted the latest loan originations following unusual withdrawal requests, resulting in surpassing its existing liquidity.
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