BlockFi announced on Nov. 28 that it has filed for Chapter 11 bankruptcy. The filing in the United States Bankruptcy Court for the District of New Jersey pertains to the company and its eight subsidiaries. The move comes after several days of speculation on the company’s financial health after the collapse of FTX.
According to a statement, BlockFi has $256.9 million on hand. It has filed motions “to pay employee wages and continue employee benefits without disruption. It also seeks to “establish a Key Employee Retention Plan to ensure the company” and has created an internal plan to reduce expenses.
BlockFi International has also filed for bankruptcy with the Supreme Court of Bermuda, according to the statement.
Today, BlockFi filed voluntary cases under Chapter 11 of the U.S. Bankruptcy Code.https://t.co/adaAx6me4r
— BlockFi (@BlockFi) November 28, 2022
Thus, BlockFi has followed the example of companies like Celsius and Three Arrows Capital.
- The cryptocurrency lender’s troubles began as the bear market intensified earlier this year, especially after the Terra collapse.
- There seemed to be a lifeboat thrown by FTX a few months down the road as the exchange provided a $400 million loan to BlockFi and had the option to purchase the company for up to $240 later on.
- However, the once SBF-led giant crashed spectacularly earlier this month, which led to a new wave of problems.
- Some reports emerged claiming that BlockFi was exploring filing for bankruptcy, but company reps refuted them at first.
- Yet, the crypto lender has indeed filed for Chapter 11 bankruptcy protection in a New Jersey court, as reported by CNBC.
- The filing reads that BlockFi had over 100,000 creditors and its liabilities were somewhere between $1 billion and $10 billion.
“We do have significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX.US.” – a company spokesman had previously said.
- This year has already seen its fair share of bankruptcy filings in the crypto industry. Celsius was among the first, followed by 3AC, Voyager, and more.