BlockFi International and eight of its subsidiaries have begun bankruptcy proceedings, citing a liquidity crisis following the collapse of FTX and reliance on Alameda Research.
BlockFi International has filed for bankruptcy in the District of New Jersey under Chapter 11 of the U.S. Code and in the Supreme Court of Bermuda. Representatives of the company wrote about it on the official Twitter account.
According to the statement, BlockFi’s balance sheet currently stands at $256.9 million, and that amount will allow the company to “provide sufficient liquidity to support certain operations during the restructuring process.” The company’s lawyers also filed a petition “to pay employees’ salaries and benefits,” but warned that about 70 percent of them will be laid off shortly.
According to the filing, the company has more than 100,000 creditors, the largest of which are:
- Ankura Trust Company LLC ($729 million);
- West Realm Shires Inc. ($275 million);
- U.S. Securities and Exchange Commission ($30 million).
As a reminder, Flori Marquez, the founder of BlockFi, previously claimed that the company was “fully operational” and independent of FTX and Alameda Research. A few days later, however, the company announced that it was suspending withdrawals due to the bankruptcy of FTX and its “significant dependence” on it. In particular, Sam Bankman-Fried “saved” BlockFi from the crisis this summer by giving the platform a loan of $400 million.
The announcement of the bankruptcy sparked several conflicting opinions in the Twitter community. For example, Matt Odell, host of a crypto podcast, wrote that BlockFi’s bankruptcy was not at all due to the company’s dependence on FTX or Alameda Research. He claimed that the platform was lending customer funds to traders who were “carelessly risking with leverage.” Other users have begun to wonder why the SEC, which is “supposedly protecting” BlockFi users, is not returning the loan they took from the company, knowing how the platform’s problems are affecting users.
It has also become known that BlockFi’s lawyers have filed a lawsuit against Emergent Fidelity Technologies, a company associated with Sam Bankman-Fried. According to the complaint, Emergent Fidelity Technologies agreed with BlockFi to guarantee the borrower’s payment and used “common stocks” as collateral. These particular stocks are the target of the lawsuit.
The document does not say who the direct borrower was, but Cointelegraph reports that Alameda Research is most likely involved. The subject of the lawsuit is likely to be the 7.6% stake in online broker Robinhood, which Emergent Fidelity Technologies spent $648 million to acquire in May 2022.
Recall that the FTX crypto exchange recently announced that it has more than $3 billion in new debts to over 50 big creditors and investigations into FTX’s collapse are going on worldwide.
