Digital Assets: (More) Crypto Contagion – BlockFi Is Insolvent

November 28, 2022 | Digital Assets, News

Crypto firm BlockFi has filed for Chapter 11 bankruptcy protection in the aftermath of FTX’s insolvency.

The domino-like chain reaction from the bankruptcy of FTX has claimed another victim in BlockFi, the troubled crypto player that offers a trading exchange and interest-bearing custodial service for cryptocurrencies. The company (and eight affiliates) have filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of New Jersey following the “shocking events surrounding FTX and associated corporate entities,” the firm said in a client update today. (CNBC)

In a press release it said: “As part of its restructuring efforts, the Company will focus on recovering all obligations owed to BlockFi by its counter-parties, including FTX and associated corporate entities (“FTX”). Due to the recent collapse of FTX and its ensuing bankruptcy process, which remains ongoing, the Company expects that recoveries from FTX will be delayed.”

BlockFi also said its Bahamian subsidiary, BlockFi International Ltd, had filed a petition with the Supreme Court of Bermuda for the appointment of joint provisional liquidators pursuant to section 161(e) of Bermuda’s Companies Act, 1981.

BlockFi revealed it had US$256.9 million in cash on hand, which amount is expected to provide sufficient liquidity to support certain operations during the restructuring process. The bankruptcy filing said it had over 100,000 creditors, with liabilities and assets ranging from $1 billion to $10 billion. It also listed a loan due of $275 million from FTX US.

Previously, in November, the company had admitted: “We do have significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at, and undrawn amounts from our credit line with FTX.US.”

Related Story: Binance Agrees To Buy (Non-US) FTX After Bankman-Fried Reveals Liquidity Crunch

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