- Cryptocurrency lender BlockFi has filed for Chapter 11, becoming the most recent victim of the crypto contagion.
- The Company’s priority will be to restore all obligations owed to BlockFi by its counterparties, which includes FTX and related corporate entities.
As stated in a Monday press statement, BlockFi Inc., a cryptocurrency lender that once had a $3 billion market cap, has applied for Chapter 11 bankruptcy protection in New Jersey.
According to the source, the crypto lender is also dismissing a significant chunk of its workforce. On November 11, the very day FTX declared bankruptcy, BlockFi, which allowed users to earn yield for depositing dormant cryptocurrencies on the platform, first stopped allowing withdrawals.
For trying to force it beyond the corner, BlockFi referenced the failure of cryptocurrency exchange FTX and the businesses it was affiliated with. In light of this, company officials stated in the press release that BlockFi will concentrate on collecting all debts owed to it by FTX and other businesses, even though it anticipates that these initiatives will be stalled.
At this time of writing, platform activity is still paused. BlockFi currently has US$256.9 million in cash, which should be enough to assist some operations during the reform period.
The BlockFi management team and board of directors instantly took steps following FTX’s demise to safeguard customers and the business, according to Mark Renzi of Berkeley Research Group, the company’s financial advisor.
According to the media release, BlockFi did work to develop the cryptocurrency industry since its inception. BlockFi envisions a transparent procedure that yields the best results for all clients and other parties involved.
The business has filed paperwork with the bankruptcy court requesting permission to keep paying employees and offering benefits in order to maintain operational capabilities.
BlockFi International, a Bermuda-incorporated company, has petitioned the Supreme Court of Bermuda for the referral of joint provisional liquidators in conformance with Bermuda law in addition to the bankruptcy court filing in New Jersey.
According to Blockfi, the Chapter 11 process is open and transparent, and the business will keep in touch with its customers to make sure users get updates from them directly.
The California Department of Financial Protection and Innovation (DFPI) also announced that it was considering suspending BlockFi’s lending licence while the department investigated the cryptocurrency lender, so it is safe to say that November did not end well for the lender.