BlockFi Files for Chapter 11 Bankruptcy
Following the collapse of potential acquirer FTX, struggling cryptocurrency lender BlockFi has applied for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of New Jersey.
The company disclosed in the filing that it had more than 100,000 creditors along with liabilities and assets ranging between $1 billion and $10 billion.
FTX U.S., the American division of Sam Bankman-Fried’s now-bankrupt corporation, was the recipient of an outstanding $275 million loan.
Similar to FTX, BlockFi has a Bahamian subsidiary. Concurrent with the American case, the subsidiary also filed for bankruptcy in the Bahamas.
Berkeley Research Group serves as BlockFi’s financial advisor. Mark Renzi from BRG stated that “BlockFi looks forward to a transparent process that achieves the best outcome for all clients and other stakeholders.”
The cryptocurrency company, one of many businesses that experienced severe liquidity problems following the collapse of Three Arrows Capital, provides a trading exchange and an interest-bearing custodial service for cryptocurrencies.
The New Jersey-based company acknowledged that it had “significant exposure” to the now-bankrupt cryptocurrency exchange FTX and its sister trading house, Alameda Research.
BlockFi previously said “we do have significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX.US.”
After FTX filed for bankruptcy, the company began speaking with restructuring experts, according to people familiar with the situation.
Many cryptocurrency companies are being impacted by FTX’s demise, including BlockFi, which PitchBook previously valued the company at $4.8 billion. FTX intervened in July to help BlockFi avoid bankruptcy by extending a $400 million revolving credit facility and making a potential purchase offer for the struggling lender.
However, FTX applied for Chapter 11 bankruptcy protection in the U.S. on November 11th.
BlockFi provided additional information in a blog post for customers with questions regarding the proceedings.