BlockFi files petitions for Chapter 11 reorganization

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Now, following the shocking events surrounding FTX and associated corporate entities (“FTX”) earlier in Nobember, BlockFi filed for bankruptcy in the US Bankruptcy Court in New Jersey on November, 28th.
Blockfi

The rapid emergence and evolution of the cryptocurrency lending industry saw BlockFi experience a significant amount of pressure throughout the past year. Now, following the shocking events surrounding FTX and associated corporate entities (“FTX”) earlier in Nobember, BlockFi filed for bankruptcy in the US Bankruptcy Court in New Jersey on November, 28th.

On November 10, the platform shared a message on Twitter stating that it was pausing its activity. It then said that its activity would continue to be on pause.

The company’s goal is to continue to provide its clients with the best possible service while it works toward a comprehensive restructuring. In its court filing, BlockFi noted that it has a total of over 100,000 creditors. It also said that its assets and liabilities are worth up to $10 billion.

According to BlockFi, it has over $256.9 million in cash, and it plans to use this to support its operations during the bankruptcy process. However, it still has a list of unsecured creditors that totals around $729 million. One of these is FTX, which has a claim of over $275 million.

Following the collapse of FTX, BlockFi’s board of directors and management team immediately took action to protect its clients. Mark Renzi, the company’s financial advisor, noted that the company has worked to advance the cryptocurrency industry and positively shape it. BlockFi is now focused on carrying out a transparent process to achieve the best outcome for its stakeholders.

The company noted that it will focus on recovering all of its obligations to its various counterparties, such as FTX. In July, FTX signed a deal to acquire BlockFi, which was described by its CEO Zac Prince as a potential acquisition worth up to $240 million. However, shortly before FTX filed for bankruptcy, the company’s operations started to crumble.

This news comes after other crypto-focused companies, such as Celsius and Voyager, have already gone through bankruptcy.

In March 2021, BlockFi raised a total of $350 million in a Series D funding round. The company was led by Bain Capital Ventures, which was joined by other investors such as Tiger Global and DST Global. At the time of the round, the company was valued at around $3 billion.

In February, the US Securities and Exchange Commission accused BlockFi of failing to register its retail lending product and violating the Investment Company Act of 1940.

The company agreed to settle the charges with the SEC by paying a $50 million penalty. It also agreed to pay a total of $50 million in fines to 32 states. On Monday, BlockFi revealed that it owes the SEC around $30 million.

In order to maintain its operations during the bankruptcy process, BlockFi has filed a series of motions with the court. These motions are designed to allow the company to continue its business.

On the first day of its bankruptcy, BlockFi filed a number of motions to continue its employee benefits and pay its workers. It also asked the court to approve its Employee Retention Plan. These actions are designed to ensure that the company’s employees have the necessary resources to carry out their duties during the bankruptcy process.

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