The filing indicates that the firm could have up to $10 billion in liabilities, as contagion from FTX spreads.
BlockFi has filed for chapter 11 bankruptcy, according to a press release.
The lending platform is the latest victim of contagion within the industry that originated with the collapse of the cryptocurrency exchange FTX.
According to the filing, BlockFi has over 100,000 estimated creditors and an estimated $1-10 billion in liabilities. The filing confirms that the firm has $256.9 million cash in hand.
A released statement on BlockFi’s Twitter explained: “As part of our restructuring efforts, we will focus on recovering all obligations owed to BlockFi by counterparties, including FTX.
Acting in the best interest of our clients is our top focus and continues to guide our path forward. Chapter 11 is a transparent process and we will continue to communicate with our clients to ensure they hear directly from us.”
This filing is yet another example of lenders facing insolvency in recent months in the wake of industry-wide collapse. In July of this year, Celsius filed for bankruptcy, and just recently, Genesis halted withdrawals, forcing Gemini Earn to as well.
According to a source that spoke with Decrypt, alongside the bankruptcy proceedings, BlockFi will also be laying off a “large portion” of its staff.
BlockFi was bailed out by FTX in June of 2022 as a result of contagion from the collapse of cryptocurrency hedge fund Three Arrows Capital, and was shortly acquired by FTX.
With the recent implosion of FTX and the connected Alameda Research hedge fund, questions about BlockFi’s ability to cover customer assets began to surface. These only increased after BlockFi confirmed they did not have further clarity on the situation surrounding FTX and began limiting customers on their platform, including halting withdrawals.
In a blog post, BlockFi included additional resources for customers with questions about the proceedings.
Source: Bitcoin Magazine - Bitcoin News, Articles and Expert Insights