BlockFi, valued at about $4.8 billion, is one of the firms feeling the pressure from the FTX collapse. Another victim of the sector. This platform for lending crypto assets and financial services, registered this Monday an application to avail itself of the voluntary protection of the suspension of payments under Chapter 11 before the bankruptcy court of the district of New Jersey. It included eight of its affiliates.
In its documentation, the company indicated that it had more than 100,000 creditors, with liabilities and assets ranging from $1 billion to $10 billion. The company listed an outstanding loan of $275 million to FTX US, the American arm of the now-ruined empire of St. Bankman-Fried.
The activity of this company was suspended and it specified that it has 256.9 million dollars in cash, an amount that is expected to provide liquidity to support certain operations during the restructuring process.
Like FTX, BlockFi has a subsidiary in the Bahamas. This subsidiary also enters suspension of payments with the same request in the US.
BlockFi is only at the beginning of the process to answer how it will pay its customers. According to the request, only the ten main creditors owe about 1,200 million. The company's largest unsecured creditor, Ankura Trust Company, is owed about $729 million, the petition states. Ankura acts as a trustee for BlockFi's interest-bearing crypto accounts.
It was founded in 2017, with headquarters in Jersey City, by Zac Prince and Flori Marquez, and backed by Valar Vetures, an extension of Thiel Capital. Others listed as capital investors are the Winklevoss twins, who once sued Mark Zickberberg for the alleged theft of the idea with which Facebook was created. Its operational capacity consisted of lending money to clients using cryptocurrency assets as collateral.
In this restructuring, the company will focus on recovering all obligations owed to BlockFi by its counterparties, including FTX itself and other associated entities, although it assumes that due to the recent fall of this giant, recoveries will be delayed.
"With the collapse of FTX, BlockFi's management team and board of directors immediately took action to protect customers and the company," said Mark Renzi of Berkeley Research Group, BlockFi's financial adviser. He thus expressed the confidence that a transparent process achieves the best result for all clients and interested parties.
But this firm admitted that it had "significant exposure" to the now-bankrupt FTX and Alameda Research, its sister trading house. In July it received a financial injection from FTX, given the danger of decapitalization, and it also had guaranteed loans to Alameda. BlockFi began restructuring talks within days of FTX's collapse.
The buying and selling platform founded by Bankman-Fried, presented on November 11 its request for suspension of payments to carry out a process of evaluation and liquidity of assets for the benefit of creditors and interested parties. Its collapse occurred in just three days. Its solvency had been called into question after its rival Binance decided to backtrack on its intention to come to the rescue of FTX after the opening of investigations by the Securities and Exchange Commission and the United States Department of Justice.