The crypto lending platform collapsed in the wake of FTX, freezing withdrawals and filing for bankruptcy weeks later.
It’s a new domino falling. FTX’s descent into hell has been better than that of cryptocurrency lending company BlockFi. The company has just filed for Chapter 11 bankruptcy protection, allowing the platform to maintain minimal operations while it waits for a buyer. BlockFi’s situation was already precarious after Terra’s collapse, but this new blow has put an end to the firm’s hopes.
BlockFi announced in a press release that it is filing a bankruptcy petition to help “Stabilize its function”. This procedure applies to BlockFi and all of its affiliates. In parallel, the platform indicates that it is launching “An internal plan to significantly reduce costs including labor costs”. In other words, the company prepares a redundancy plan.
As a reminder, BlockFi announces that the withdrawal has been suspended since November 11, the day of the bankruptcy of the FTX stock exchange. What undermines the confidence of its investors. With good reason, the company borrowed $250 million from FTX… With the collapse of the value of the cryptocurrency (-95%), BlockFi found its head under water.
Sam Bankman-Fried follows
To date, the platform has $256.9 million in cash. According to BlockFi, these funds “Sufficient to support some activities in the restructuring process”. At the same time, the company plans to focus on collecting all the liabilities it owes, “Including FTX and Affiliated Legal Entities”.
Therefore, the company has already started proceedings against Sam Bankman-Fried, the founder of FTX. The dispute concerns his ownership of Robinhood shares, which are 7.6% of the total value of about $650 million. 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 share transfer never took place.
So the situation is urgent for BlockFi, which mentions at least 100,000 creditors in its bankruptcy filing. The Securities and Exchange Commission (SEC) up to $30 million and … FTX US up to $275 million.
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