BlockFi Files For Chapter 11 Bankruptcy Protection Amid FTX Fallout

As the repercussions from FTX’s downfall continue, the cryptocurrency startup BlockFi has filed for Chapter 11 bankruptcy protection. 

BlockFi reported in an announcement that they filed in the U.S. Bankruptcy Court for the District of New Jersey and are pausing all operations until further notice, according to reports.

BlockFi declared in an announcement that it had filed for bankruptcy with the US Bankruptcy Court for the District of New Jersey, which included inactivity on its platform.

We apologize that communication with our clients has not been as frequent as you have come to expect from us,

the company told its users on its website.

We look forward to transparency through our reorganization, and will work to keep clients and stakeholders informed as we make progress.

According to newly released court documents, BlockFi reports that it has 100,000 creditors with liabilities between $1 billion and $10 billion.

The company alleged in court documents that they are also liable for a $275 million loan to FTX, along with a $30 million settlement from the US Securities and Exchange Commission.

According to the court documents, the company has retained Haynes and Boone for $750,000, as well as Kirkland & Ellis LLP and Cole Schotz P.C.

With the collapse of FTX, the BlockFi management team and board of directors immediately took action to protect clients and the Company,

Financial Adviser Mark Renzi of Berkeley Research Group said in a statement.

From inception, BlockFi has worked to positively shape the cryptocurrency industry and advance the sector. BlockFi looks forward to a transparent process that achieves the best outcome for all clients and other stakeholders.

The Company mentions that BlockFi International filed a petition with the country’s Supreme Court for the appointment of joint provisional liquidators in parallel with the Chapter 11 cases currently underway in America.

Related Reading | XRP Takes A Hit Amidst Unfavorable Crypto Market Conditions

According to new CEO John J. Ray III, FTX has gone through some of the worst failures he’s ever seen. Founded by one-time crypto mogul Sam Bankman-Fried, this company declared bankruptcy on November 11th, making it a terrible example of corporate failure.

Prior to the filing, Bankman-Fried had been in negotiations with competitor Binance. However, an investigation revealed mishandled customer funds, and subsequent allegations of ongoing US agency investigations led to Binance pulling out of a potential buyout.

Comments (No)

Leave a Reply