- The crypto lending firm BlockFi has willingly filed for US bankruptcy under Chapter 11.
- The firm will revise efforts to collect debts owing to BlockFi by its partners, eg FTX and its other entities.
- BlockFi was unsure where the funding for a credit line and security for loans to Alameda had come from.
BlockFi has announced voluntarily filing for Chapter 11 reorganization. The crypto lending firm has willingly filed a case in the US Bankruptcy Court for the District of New Jersey. BlockFi has listed FTX US as one of its top unsecured creditors, with a $275 million loan.
BlockFi filed for bankruptcy becoming another digital-asset business to fail in the aftermath of the FTX exchange’s downfall and has fueled fear and doubt of further corporate bankruptcies.
The firm will focus its restructuring efforts on collecting any debts owing to BlockFi by its counterparties, including FTX and other corporate entities under FTX.
BlockFi said in a statement on Monday that it will use the Chapter 11 process to “focus on recovering all obligations owed to BlockFi by its counterparties, including FTX and associated corporate entities,” adding that recoveries are likely to be delayed by FTX’s own bankruptcy.
In order to stabilize their business and maximize value for their clients and other stakeholders, the crypto lender firm is working towards a comprehensive restructuring transaction.
In addition, Berkeley Research Group’s financial advisor Mark Renzi stated that:
“With the collapse of FTX, the BlockFi management team and board of directors immediately took action to protect clients and the Company. BlockFi looks forward to a transparent process that achieves the best outcome for all clients and other stakeholders.”
Furthermore, BlockFi has $256.9 million in cash, which should be enough to fund some activities during the reorganization process. BlockFi presently expects to resolve client claims through the Chapter 11 proceedings.
In other news, BlockFi’s assets and liabilities are valued between $1 billion and $10 billion. The New Jersey-based firm also suspended withdrawals, and when the SEC began investigating FTX, BlockFi was not sure where the funding for a credit line from FTX US and security for loans to Alameda had come from. BlockFi is the latest to declare bankruptcy in the midst of a lengthy downturn in the crypto community.
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