Following the collapse of potential acquirer FTX, crypto exchange BlockFi has applied for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the District of New Jersey.
The corporation stated in the petition that it had more than 100,000 creditors. In addition, it has liabilities of $1 billion to $10 billion and assets of $10 billion or more. FTX US, the American division of Sam Bankman-now-bankrupt Fried’s firm, was also identified as the recipient of a $275 million overdue loan by the company.
In Bermuda, a BlockFi subsidiary also filed for bankruptcy at the same time that it did in America. Like the Bahamas, Bermuda has accepted cryptocurrency as the wave of the future of money.
Both organizations created frameworks to deal exclusively with digital currency and cryptographic assets. The Bahamas and Bermuda are now facing the first substantial judicial challenges of their crypto legislation. This is due to FTX’s insolvency and BlockFi’s in Bermuda.
Per BlockFi’s bankruptcy petition, its biggest revealed client had a balance of around $28 million. As per Mark Renzi of Berkeley Research Group, BlockFi anticipates a transparent process that results in the optimal solution for all clients and stakeholders.
The crypto company, one of several businesses that had severe liquidity problems following the collapse of Three Arrows Capital, provides a trading exchange and an interest-bearing custody service for cryptocurrencies.
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The firm has previously stopped taking deposits from customers. It stated that it had considerable exposure to the now-defunct crypto exchange FTX and its sister trading house, Alameda Research.
After FTX filed for bankruptcy, the company began speaking with restructuring experts, according to people with knowledge of the situation. Requests for comment from a BlockFi representative were not immediately answered.