- Crypto lender BlockFi filed for Chapter 11 bankruptcy.
- BlockFi has $257 million in cash on hand and between $1 billion and $10 billion in total assets and liabilities.
- The firm has over 100,000 creditors. Its largest creditor is Ankura Trust Company, which has a $729 million unsecured claim.
- FTX US, legally known as West Realm Shires Inc., has a $275 unsecured claim.
- Even the U.S. Securities and Exchange Commission (SEC) is listed as a creditor with a $30 million unsecured claim.
Crypto lender BlockFi announced on Monday it has filed for voluntary Chapter 11 bankruptcy in an effort to restructure, days after halting all operations amid the fallout from FTX’s demise.
Bankruptcy filings show that BlockFi has about $257 million in cash on hand, which is expected to be enough to keep running some operations as the firm attempts to restructure. BlockFi’s Bermuda-based subsidiary also filed for bankruptcy.
The company has over 100,000 creditors and between $1 billion and $10 billion in assets and liabilities. BlockFi’s largest creditor is Ankura Trust Company, an indentured trustee firm that has a whopping $729 million unsecured claim.
West Realm Shires Inc., known as FTX US, has a $275 million unsecured claim. Interestingly, one of BlockFi’s creditors is the U.S. Securities and Exchange Commission (SEC). The agency is owed $30 million. In February, BlockFi had to pay $100 million to the SEC and several other U.S. state regulators after allegations that its high-yield lending product violated state and federal securities laws. It also had to register the product with the SEC.
BlockFi had a close relationship with Sam Bankman-Fried’s FTX. In June, BlockFi received a $400 million revolving credit facility from FTX in agreement that it will later be acquired by the now-defunct exchange. At the same time, BlockFi cut around a fifth of its workforce.
When FTX declared bankruptcy on November 11, BlockFi almost immediately paused withdrawals and other actions on its platform, citing uncertainty around the FTX situation. It was uncovered later that the company had assets on FTX at the time of its demise and that it hadn’t received all of the revolving credit from the exchange.
BlockFi, launched in 2019 by Zac Prince and Flori Marquez, was one of the leading crypto lending platforms in the market. The company offered yields as high as 10% on stablecoins and other crypto assets and at one time was valued at over $3 billion, with plans to go public in 2023.
BlockFi joins crypto lenders Celsius and Voyager Digital in going bust this year. Genesis, Silvergate, and other crypto-related companies are also rumored to be struggling with surviving the crypto winter.
On the Flipside
- It’s unclear how much exactly in liabilities BlockFi has.
- BlockFi’s relationship with FTX might go deeper than it appears on the surface.
- It’s unknown what other crypto companies are affected by BlockFi’s bankruptcy.
Why You Should Care
BlockFi was once one of the largest crypto lending platforms in the market. Its bankruptcy shows how entangled all of the centralized crypto companies are, and how easily one’s demise can affect another.
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