Crypto lender BlockFi files for bankruptcy after FTX collapse - The Guardian

The crypto lender BlockFi has go the sector’s latest large relation to state bankruptcy, arsenic the fallout of the collapse of offshore cryptocurrency speech FTX continues to spread.

BlockFi, which operates successful a akin manner to a accepted bank, paying involvement connected savings and utilizing lawsuit deposits to money lending, says it has $256.9m currency successful hand. According to tribunal documents, its creditors see FTX itself, which it owes $275m, and the US Securities and Exchange Commission (SEC), which it owes $30m.

In a connection announcing its Chapter 11 bankruptcy filing, BlockFi said: “This enactment follows the shocking events surrounding FTX and associated firm entities and the hard but indispensable determination we made arsenic a effect to intermission astir activities connected our platform.

“Since the pause, our squad has explored each strategical enactment and alternate disposable to us, and has remained laser-focused connected our superior nonsubjective of doing the champion we tin for our clients.

“These Chapter 11 cases volition alteration BlockFi to stabilise the concern and supply BlockFi with the accidental to consummate a reorganisation program that maximises worth for each stakeholders, including our valued clients.”

The SEC levied a $100m good connected the institution successful February for violating securities laws, arguing that the concern products the institution offered qualified arsenic unregistered securities. The outstanding $30m indebtedness is seemingly the unpaid information of that fine.

BlockFi has already stumbled adjacent to bankruptcy erstwhile already this year, successful the aftermath of spring’s crypto crash.

After main enforcement Zac Prince said the institution needed an injection of superior to stave disconnected a liquidity crisis, it signed a woody with nary different than FTX, which gave the institution entree to $400m successful loans. The terms of the woody was an enactment from FTX to bargain the lender for astir $240m, a crisp diminution from a highest valuation of $3bn.

That enactment was ne'er exercised, and the illness of the cryptocurrency speech sparked a slope tally astatine BlockFi, seen by customers arsenic dangerously entangled with Sam Bankman-Fried’s company, that proved terminal. Without the quality to gully connected the recognition line, nor entree its ain funds stored connected the FTX platform, BlockFi was forced to record for Chapter 11 bankruptcy.