Money

Crypto Company BlockFi Files For Bankruptcy

Published NOV 29 2022

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Image credit: verge

The Facts

BlockFi, a New Jersey-based cryptocurrency lender, announced Monday that it has filed for Chapter 11 bankruptcy protection after the firm was caught up in the recent collapse of the FTX exchange.
Bloomberg.com
In June, Sam Bankman-Fried's FTX bailed out Zac Prince's BlockFi with a loan of $250M and later partnered with the cryptocurrency lender. But FTX filed for bankruptcy on Nov. 11.
Decrypt
In its bankruptcy filing, BlockFi noted it had more than 100k creditors with assets and liabilities ranging from $1B to $10B. It also owes $30M to the US Securities and Exchange Commission.
BBC News
The company listed an outstanding $275M loan to FTX – its second-largest creditor – which it blames for creating a liquidity crisis for the firm. Meanwhile, BlockFi owes $729M to Ankura Trust, its largest creditor.
The Financial Express
Earlier this month, BlockFi sold a portion of its crypto assets to raise $238.6M to fund its bankruptcy. The company now reportedly has $256.5M in cash on hand.
Reuters
BlockFi, which suspended withdrawals a few weeks ago, is set to pay back its Wallet customers in full as part of its initial restructuring plan. Its account holders and creditors are expected to receive a combination of cryptocurrency, cash, and new equity shares.
XM

Sources Split

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The Spin

Narrative A

This is just one of many digital-asset firms to collapse, demonstrating that stringent government regulations for transactions in virtual coins are necessary. An unregulated business environment may have irreversible and disastrous economic consequences — for lenders, buyers, and the state.

India Today

Narrative B

The whole point of cryptocurrency is its decentralized structure and immunity to being governed by wealthy conglomerates or authoritarian governments. It's essential to keep cryptocurrency technology as it's supposed to be – decentralized and transparent – to avoid further crypto explosions and bankruptcies.