- After suspending withdrawals a few weeks ago, the BlockFi exchange has finally filed for Chapter 11 bankruptcy seeking to restructure, continuing operations in the meantime.
The “disappearance” of the FTX exchange will go down as one of the most important events in cryptocurrency history, and it continues to have consequences. Some point out that what is known is similar to an iceberg: only one tip is visible, while underwater there is much more. What did come to the surface in the last hours was the declaration of bankruptcy of BlockFi, high caliber lender in the industry.
After suspending withdrawals a few weeks ago, the platform reported that it was “filing for Chapter 11 bankruptcy protection, indicating that it hoped to restructure, continuing operations in the meantime,” it said. Coin Desk.
BlockFi, founded in 2017 by Flori Marquez and Zac Prince, was heavily exposed to the FTX exchange, as they themselves explained.
BlockFi bankrupt
Within the information provided by the company, they announced that they have $257 million dollars in cash, while a subsidiary in Bermuda (the headquarters is in New Jersey) was looking for liquidity to get hold of fiat money. These numbers, however large they may seem, are minuscule in the face of the commitments to face.
Company executives gave certain estimates and believe that there are more than 100,000 creditors. Between assets and liabilities, the company has debts between 1,000 and 10,000 million dollars. Among the creditors are West Realm Shires Inc, the legal name of FTX US, which “has an unsecured credit of $275 million,” like the Securities and Exchange Commission (SEC) itself, with “an unsecured credit of 30 million dollars”.
The one most affected by BlockFi’s mismanagement of risks is Ankura Trust Company. Although it is not confirmed, they appear to have signed an alliance in February and a debt of $730 million was left.
“Acting in the best interest of our clients is our highest priority and continues to guide our journey.o”, they stressed through an email that reached all its users.
BlockFi’s relationship with FTX
Earlier this year, when the crypto scene was far from what it is today, FTX gave BlockFi a powerful credit to keep it going. In an initial round in June, the lender raised $1 billion after receiving $350 million in March 2021. At that time, being one of the heavyweights in the industry, it reached a valuation of more than 3 billion dollars.
BlockFi’s next big goal, the one that will obviously no longer be met, was to go public in 2023. US exchange Coinbase is one of the few to achieve that status.
After paying a $100 million fine after settling with the SEC on allegations that its product violated state and federal securities laws, BlockFi fired 20% of its employees over the crypto winter.
The market continues in red
The start of the week was far from what was expected and the market turned red again. As of this writing, the price of Bitcoin is hovering around $16,200, still far from the recently marked $15,600 floor.
Ethereum, the second most valuable cryptocurrency on the market, is not doing well either and is at $1,170. In the last three months it had a peak to close to $1,900 dollars.
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