For the past few days, rumors about BlockFi’s economic situation have been getting more and more pessimistic… It’s now official: the crypto company BlockFi and its subsidiaries have initiated bankruptcy proceedings in the United States by filing for the famous Chapter 11 protection. This bankruptcy is likely related to the collapse of FTX.
BlockFi Group announces its bankruptcy
Suffering from enormous financial difficulties, the crypto-focused lending and returns company BlockFi and its eight affiliates have announced the opening of bankruptcy proceedings. BlockFi and its affiliates have thus filed for Chapter 11 bankruptcy protection in the United States. The company also announced the layoff of the majority of its employees.
With the initiation of this voluntary bankruptcy proceeding, the BlockFi group hopes to stabilize its operations and offer the Company the opportunity to carry out a complete restructuring operation. The group, which has suspended withdrawals for its users since November 11, hopes above all to restore its customers’ rights. At least that’s what Mark Renzi of Berkeley Research Group said.
Since its inception, BlockFi has worked to positively shape the cryptocurrency industry and advance the sector. BlockFi looks forward to a transparent process to achieve the best outcome for its customers and stakeholders.Mark Renzi, financial advisor to the company
BlockFi Group is still hoping to make a soft bankruptcy for its teams. In particular, the company has filed a lawsuit in the U.S. District Court for the District of New Jersey seeking permission to pay its employees’ wages and benefits without interruption. The company also plans to maintain a small workforce. BlockFi has more than $250 million to support its restructuring plan.
BlockFi, collateral victim of the FTX collapse
The bankruptcy of the BlockFi group follows the collapse of the FTX exchange. Indeed, allegations from BlockFi‘s CCO suggest that her company had taken out a $400 million loan from FTX.
Due to its collapse, the FTX exchange would not have been able to honor its commitments. It was in the wake of this affair that BlockFi announced on November 11, the suspension of customer fund withdrawals. According to an official of BlockFi, this measure was aimed at protecting customers and the company.
Moreover, the BlockFi group is obviously not ready to give up the loan contracted with FTX. The company intends to collect all obligations owed to it by FTX in order to support its restructuring. BlockFi is under no illusion that FTX will be able to meet its obligations due to its economic difficulties and the bankruptcy proceedings that the exchange has initiated.
Thanks to its crypto services including collateralized loans, BlockFi was a well-known company in the cryptosphere. As the crypto ecosystem struggles to recover from the collapse of FTX, BlockFi’s bankruptcy further collapses user confidence in centralized platforms. Hopefully, protection under Chapter 11 of the U.S. law will at least allow the group’s customers to get their funds. These sad episodes should awaken in every user the need to control their own assets. The saying NOT YOUR KEYS, NOT YOUR ASSETS has never made more sense than today.
I dream of a world where every citizen has total control over themselves, including their finances. I believe that Bitcoin is one of the tools that will achieve this revolution. Since 2019, I am learning about this cryptocurrency and spreading the word around.