Technology Crypto finance firm BlockFi is filing for bankruptcy after...

Crypto finance firm BlockFi is filing for bankruptcy after the fall of FTX

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The bankruptcy filing filed in New Jersey lists Ankura Trust Company as the largest creditor, at $729 million, followed by FTX US at $275 million. The SEC is fourth on the list and owes $30 million as a result of fines imposed earlier this year.

BlockFi Chapter 11 filing with the four largest creditors.
Image: BlockFi

BlockFi says it currently has $256.9 million in cash on hand, which is “expected to provide enough liquidity” to keep the company afloat as it restructures its business. The company will focus on “collecting all obligations” owed by its counterparties to BlockFi, including FTX, although it expects this process to be delayed by the collapse of FTX.

And this afternoon the Financial times reports that the pursuit includes suing FTX founder Sam Bankman-Fried over the 7.6 percent stake in Robinhood he owns, claiming it was pledged earlier this month as collateral to guarantee payment obligations.

According to a report of Decrypt, the company also plans to lay off “a large proportion” of its employees. The press release does not directly mention layoffs, but notes that BlockFi wants to cut costs, “including labor costs”.

BlockFi’s platform allowed users to trade and lend cryptocurrency in hopes of earning “yield,” or interest. The company fired about 20 percent of its employees in June, blaming the downturn in the crypto market, and agreed to pay $100 million in fines to the SEC and other regulators based on its BlockFi interest accounts that were considered as unregistered securities and that BlockFi was not properly registered as an investment company.

on November 14 BlockFi said yes “significant exposure” to the exchange and the “associated corporate entities” as FTX had given the company a $400 million credit facility and had the option to purchase BlockFi. BlockFi had used most of that money, according to a report from The Wall Street Journalafter tell CNBC that he hadn’t touched it in July.

Now FTX has nearly collapsed after a financial scandal, with founder Sam Bankman-Fried allegedly using client money to prop up his other company, Alameda Research. Within days, estimates of Bankman-Fried’s personal assets went from $26 billion to zero.

An exchange as large as FTX folding would undoubtedly have knock-on effects for the crypto industry as a whole and could eventually spark a push to regulate the space even further. BlockFi had promised it had “the necessary liquidity to explore all options”, and this is apparently the only option left.

Update Nov. 28, 6:40 PM ET: Updated to note BlockFi’s lawsuit against Sam Bankman-Fried.

Shreya Christinahttps://ukbusinessupdates.com
Shreya has been with ukbusinessupdates.com for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider ukbusinessupdates.com team, Shreya seeks to understand an audience before creating memorable, persuasive copy.

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