As the “crypto winter” continues to bite, another large crypto lender has filed for bankruptcy. Just weeks after the dramatic implosion of FTX, previously the second biggest crypto exchange by trading volume, crypto lender BlockFi has filed for Chapter 11 bankruptcy protection, sending shockwaves across the market.
According to the filing, BlockFi will be able to stabilise operations and reorganise so it can fulfill its original goal of connecting the crypto and conventional finance worlds.
Today, BlockFi filed voluntary cases under Chapter 11 of the U.S. Bankruptcy Code.https://t.co/adaAx6me4r
— BlockFi (@BlockFi) November 28, 2022
According to its Chapter 11 [PDF] petition, Block Fi includes eight additional related organisations, all of which have a wide range of assets ($1 billion to $10 billion) and liabilities ($1 billion to $10 billion).
On July 13, 2022, Celsius Network joined the ranks of other crypto companies seeking bankruptcy protection from their creditors. It was on July 5, 2022, when Voyager Digital followed suit.
NEW: BlockFi bankruptcy has over 100,000 creditors
— Bitcoin Magazine (@BitcoinMagazine) November 28, 2022
About 150 cryptocurrency enterprises have sought to rescue cash from Binance, the biggest cryptocurrency exchange, maybe trying to escape a similar fate during the FTX pandemic.
Binance, a competitor of FTX, accelerated the latter’s decline by declaring intentions to sell $580 million in FTX’s FTT tokens and a proposal to purchase the flailing business before rescinding both.
According to the Wall Street Journal, in 2021, BlockFi had $7.5 billion in loans and between $14 billion and $20 billion in client deposits. The US SEC dropped its claims of noncompliance with securities laws against Block Fi in February in exchange for a $100 million settlement from the company.
The agency ruled that Block Fi marketed an unregistered lending product and made a false and misleading statement on its website over two years about the amount of risk in its lending activities and loan portfolio.
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