The crypto lending platform collapsed in the wake of FTX and filed for bankruptcy, weeks after the withdrawals freeze.
It’s a new domino that falls. FTX’s descent into hell got the better of BlockFi, a cryptocurrency lending company. The company has just filed for Chapter 11 bankruptcy protection, which allows the platform to maintain minimal activity while waiting for a buyer. BlockFi’s situation was already precarious after the collapse of Terra, but this new blow came to put an end to the firm’s hopes.
worthless tokens
It was through a press release that BlockFi announced the filing of a bankruptcy petition to help “stabilize its activity”. The procedure concerns BlockFi and all of its subsidiaries. In parallel, the platform also indicates that it is launching “an internal plan to drastically reduce expenses, including labor costs”. In other words, the company prepares a redundancy plan.
As a reminder, BlockFi declares the suspension of withdrawals as of November 11, the day of the bankruptcy of the FTX stock exchange. What undermine the confidence of its investors. With good reason, it seems, since it turns out the company borrowed $250 million from FTX…in FTT tokens. With the collapse of the value of cryptocurrency (-95%), BlockFi therefore found its head under water.
Chasing Sam Bankman-Fried
To date, the platform has $256.9 million in cash. According to BlockFi, these funds are “sufficient to support certain operations during the restructuring process”. At the same time, the company plans to focus on collecting all obligations owed to it, “including FTX and associated legal entities”.
Thus, the company has already initiated proceedings against the founder of FTX, Sam Bankman-Fried. The dispute concerns the Robinhood shares he owns, ie 7.6% for a total value of around 650 million dollars. The fact is that these shares were pledged as security for payment. However, when FTX filed for bankruptcy, BlockFi immediately sought to recover the collateral. However, according to the company, the transfer of the shares was never carried out.
The situation is therefore urgent for BlockFi, whose bankruptcy filing mentions a minimum of 100,000 creditors. Among which the Securities and Exchange Commission (SEC) up to 30 million dollars and… FTX US, up to 275 million dollars.
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