BlockFi appears to be collapsing, just like crypto itself, as it has filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of New Jersey, following the spectacular collapse of the FTX exchange earlier this month, and Bitcoin’s value down more than 70% from a 2021 peak.
The liquidity crisis, according to BlockFi, was caused by its exposure to FTX through loans to Alameda, a crypto trading firm affiliated with FTX, as well as cryptocurrencies held on FTX’s platform that became trapped there.
The company indicated in the filing that it had assets and liabilities ranging from $1 billion to $10 billion, more than 100,000 creditors, assets and liabilities ranging from $1 billion to $10 billion, and an outstanding $275 million loan to FTX US, the American arm of Sam Bankman-now-bankrupt Fried’s empire.
According to BlockFi’s bankruptcy filing, the company’s largest disclosed client has a balance of nearly $28 million. BlockFi also stated that it has approximately $257 million in cash on hand, which it believes will be sufficient liquidity to support it during the restructuring process.
Layoffs will be part of the restructuring. It was unclear how many employees would be let go, but the company said it had begun an internal plan to significantly reduce expenses, including labor costs.
The sources for this piece include an article in Reuters.