BlockFi Files For Bankruptcy — Bitcoin Magazine

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Block­Fi has filed for chap­ter 11 bank­rupt­cy, accord­ing to a press release.

The lend­ing plat­form is the lat­est vic­tim of con­ta­gion with­in the indus­try that orig­i­nat­ed with the col­lapse of the cryp­tocur­ren­cy exchange FTX.

Accord­ing to the fil­ing, Block­Fi has over 100,000 esti­mat­ed cred­i­tors and an esti­mat­ed $1–10 bil­lion in lia­bil­i­ties. The fil­ing con­firms that the firm has $256.9 mil­lion cash in hand. 

A released state­ment on BlockFi’s Twit­ter explained: “As part of our restruc­tur­ing efforts, we will focus on recov­er­ing all oblig­a­tions owed to Block­Fi by coun­ter­par­ties, includ­ing FTX.

Act­ing in the best inter­est of our clients is our top focus and con­tin­ues to guide our path for­ward. Chap­ter 11 is a trans­par­ent process and we will con­tin­ue to com­mu­ni­cate with our clients to ensure they hear direct­ly from us.” 

This fil­ing is yet anoth­er exam­ple of lenders fac­ing insol­ven­cy in recent months in the wake of indus­try-wide col­lapse. In July of this year, Cel­sius filed for bank­rupt­cy, and just recent­ly, Gen­e­sis halt­ed with­drawals, forc­ing Gem­i­ni Earn to as well.

Accord­ing to a source that spoke with Decrypt, along­side the bank­rupt­cy pro­ceed­ings, Block­Fi will also be lay­ing off a “large por­tion” of its staff. 

Block­Fi was bailed out by FTX in June of 2022 as a result of con­ta­gion from the col­lapse of cryp­tocur­ren­cy hedge fund Three Arrows Cap­i­tal, and was short­ly acquired by FTX.

With the recent implo­sion of FTX and the con­nect­ed Alame­da Research hedge fund, ques­tions about BlockFi’s abil­i­ty to cov­er cus­tomer assets began to sur­face. These only increased after Block­Fi con­firmed they did not have fur­ther clar­i­ty on the sit­u­a­tion sur­round­ing FTX and began lim­it­ing cus­tomers on their plat­form, includ­ing halt­ing withdrawals. 



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