BlockFi files for bankruptcy

Cryptocurrency lender BlockFi announced it has filed for Chapter 11 bankruptcy via a Nov. 28 tweet, citing the company’s exposure to FTX and its sister hedge fund Alameda Research as the reason behind the decision.

BlockFi is facing a liquidity crisis and listed its assets and liabilities as being between US$1 billion and US$10 billion with US$256.9 million in cash on hand. 

BlockFi said it owed money to more than 100,000 creditors in its bankruptcy filing. The company owes US$729 million to its  largest creditor Ankura Trust and US$275 million to its second-largest creditor, FTX. 

The company has filed motions to keep paying employee wages and continuing employee benefits and seeks to create a ‘Key Employee Retention Plan to ensure the company retains trained internal resources for business-critical functions.’ 

BlockiFi explained its Chapter 11 cases will enable the company to stabilize its business and maximize value for all stakeholders and clients.

The news comes after BlockFi halted withdrawals on its platform on Nov.11 after speculations that the company may experience a liquiity crisis due to its exposure to FTX.

After filing for Chapter 11, BlockFi filed a lawsuit against Bankman-Fried’s Emergent Fidelity Technologies vehicle in an attempt to recover shares pledged as collateral in Robinhood Markets Inc. 

Photo: Reuters