BlockFi Bites the Dust, Files for Chapter 11 Bankruptcy.
BlockFi, a crypto firm that has more than 100,000 creditors with liabilities and assets ranging from $1 billion to $10 billion, has filed for Chapter 11 bankruptcy protection in the U.S Bankruptcy Court. The company has an outstanding $275 million loan to FTX U.S.
The bankruptcy filing states that BlockFi’s largest disclosed client has a balance of nearly $28 million. Mark Renzi, from Berkeley Research Group (BlockFi’s financial advisor(, said BlockFi is looking forward to a transparent process that achieves the best outcome for all its clients and stakeholders. It should be noted that BlockFi was one of the many firms to face serious liquidity issues after the collapse of Three Arrows Capital (3AC).
BlockFi had suspended customer withdrawals because of significant exposure to Sam Bankman-Fried’s FTX collapse. It had said the company does have significant exposure to FTX and associated corporate entities that encompass obligations owed to BlockFi by Alameda, assets held at FTX.com, and undrawn amounts from their credit line with FTX.US. BlockFi then started talking with restructuring professionals.
According to PitchBook, BlockFi is among the many crypto firms feeling the pressure of FTX’s collapse. Sam Bankman-Fried had helped the crypto company in July to save it from bankruptcy and extended a $400 million revolving credit facility. FTX had also offered to potentially buy out the firm.
But then FTX itself went down, from a $32 billion valuation to $0.