Crypto firm BlockFi files for bankruptcy, cites FTX exposure
Cryptocurrency lender BlockFi has filed for Chapter 11 bankruptcy protection. The New Jersey-based company, founded in 2017 by fintech executive-turned-crypto entrepreneur Zac Prince, cited its substantial exposure to FTX creating a liquidity crisis as the reason for the same.
The filing in a New Jersey court comes as crypto prices have plummeted. The price of bitcoin is down more than 70% from a 2021 peak.
“BlockFi’s Chapter 11 restructuring underscores significant asset contagion risks associated with the crypto ecosystem,” said Monsur Hussain, senior director at Fitch Ratings.
BlockFi said it was seeking court protection to restructure, settle its debts and recover money for investors. In the filing, the company indicated that it had more than 100,000 creditors, and listed its assets and liabilities as being between $1 billion and $10 billion. The company also listed an outstanding $275 million loan to FTX US, the American arm of Sam Bankman-Fried’s now-bankrupt empire.
Mark Renzi of Berkeley Research Group, the company’s financial advisor, “From inception, BlockFi has worked to positively shape the cryptocurrency industry and advance the sector. BlockFi looks forward to a transparent process that achieves the best outcome for all clients and other stakeholders”.