BlockFi files for bankruptcy after having significant exposure to bankrupt crypto exchange FTX.
BlockFi, a Jersey City-based digital asset lender established in 2017 by Zac Prince and Flori Marquez, has filed for Chapter 11 bankruptcy protection.
Chapter 11 of the U.S. Bankruptcy Code was filed in the United States Bankruptcy Court for the District of New Jersey for BlockFi and eight of its affiliate companies.
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According to the press release shared on November 28th, with the filing BlockFi aims to “stabilize its business” and create “a comprehensive restructuring transaction that maximizes value for all clients and other stakeholders.”
It is worth noting that on November 15th, the news broke that BlockFi was allegedly preparing to file for bankruptcy. More than a week later, BlockFi filed for bankruptcy.
At that time, BlockFi claimed that it had “significant exposure to FTX and associated corporate entities.” Therefore, in its announcement the company claims that it will attempt to recover “all obligations owed to BlockFi.”
BlockFi’s financial advisor Mark Renzi of Berkeley Research Group, commented on the matter, noting:
With the collapse of FTX, the BlockFi management team and board of directors immediately took action to protect clients and the Company. BlockFi looks forward to a transparent process that achieves the best outcome for all clients and other stakeholders.
In the press release, the company noted that it has filed a motion to “pay employee wages and continue employee benefits without disruption.” On top of that, BlockFi aims to “establish a Key Employee Retention Plan to ensure the company retains trained internal resources for business-critical functions” and outline an internal plan, allowing it to cut the company’s expenses.
It can be assumed that one of the ways BlockFi aims to cut its expenses is by laying off employees. Based on a Bloomberg report, the company informed around 250 out of 370 of its employees about them losing a job before the company filed for bankruptcy. On top of that, BlockFi has reportedly sold $239 million worth of crypto to cover its bankruptcy expenses.
BlockFi’s Chapter 11 filing reveals that the company has over 100,000 creditors, digital assets, and liabilities of between $1 and $10 billion.
