The crypto lender BlockFi has become the latest big operator to declare bankruptcy, as the fallout of the collapse of offshore exchange FTX continues to spread.
BlockFi, which operates in a similar fashion to a conventional bank, paying interest on savings and using customer deposits to fund lending, says it has $256.9 Million cash in hand. According to court documents, its creditors include FTX itself, to which it owes $275 Million, and the US Securities and Exchange Commission (SEC), to which it owes $30 Million.
“This action follows the shocking events surrounding FTX and associated corporate entities and the difficult but necessary decision we made as a result to pause most activities on our platform.”
“Since the pause, our team has explored every strategic option and alternative available to us, and has remained laser-focused on our primary objective of doing the best we can for our clients.”
“These Chapter 11 cases will enable BlockFi to stabilise the business and provide BlockFi with the opportunity to consummate a reorganisation plan that maximises value for all stakeholders, including our valued clients.”
In a statement announcing its Chapter 11 bankruptcy filing, BlockFi said
The SEC levied a $100 Million fine on the company in February for violating securities laws, arguing that the investment products the company offered qualified as unregistered securities. The outstanding $30 Million debt is apparently the unpaid portion of that fine.
BlockFi has already stumbled close to bankruptcy once already this year, in the wake of the crypto crash.
