FTX Fallout Woes – Crypto Lender BlockFi Files for Bankrupcy

BlockFi, a cryptocurrency lender, filed for bankruptcy protection on Monday, only days after stopping withdrawals in the aftermath of FTX’s bankruptcy filing.

The firm announced its intention to file for Chapter 11 bankruptcy protection, suggesting that it wanted to restructure while maintaining operations in the meanwhile. BlockFi has around $257 million in cash in hand, according to a press release. A Bermuda-based affiliate has also filed for liquidation, which is a similar procedure.

BlockFi already banned withdrawals a few weeks ago owing to the continued uncertainty surrounding FTX’s assets. Earlier this year, the firm liquidated a significant client and required a line of credit from FTX to survive. BlockFi urged consumers not to put cash into its wallet or interest accounts after suspending withdrawals.

After obtaining $350 million at a $3 billion valuation in March 2021, the lender planned to raise money at a $1 billion down round value in June. As recently as last July, the business planned to go public within the next year and a half, with a $500 million financing on the way.

BlockFi’s management estimate the firm has more than 100,000 creditors, according to the petition, and ticked off the ranges. Executives estimate the company’s assets and liabilities to be worth between $1 billion and $10 billion.

West Realm Shires Inc., the formal name for FTX US, has a $275 million unsecured claim against the corporation, and the Securities and Exchange Commission (SEC) has a $30 million unsecured claim. The identities of the bulk of the other top 50 creditors were withheld.

Ankura Trust Company is BlockFi’s largest creditor, which the lender appears to have engaged in February and now has a $730 million unsecured claim.