BlockFi Files for Bankruptcy Protection following FTX Collapse

BlockFi, the main cryptocurrency lender has reportedly filed for Chapter 11 bankruptcy protection a New Jersey court along with eight affiliates following the dramatic collapse of the FTX exchange earlier this month.  

FTX recently filed for protection   after traders pulled $6bn from the platform in three days, with Binance reneging a rescue deal.

FTX and BlockFi entered into a deal in July in which the latter “was to receive a $400m revolving credit facility while FTX got an option to buy it for up to $240m.

In the court filing, Aljazeera reports, “BlockFi listed FTX as its second-largest creditor, with $275m owed on a loan extended earlier this year. It said it owes money to more than 100,000 creditors.”

Similarly, BlockFi has listed the U.S Securities and Exchange Commission(SEC) as one of its largest creditors, with a $30m claim.

A subsidiary of BlockFi agreed to pay $100m to the SEC and 32 states earlier this year to settle charges in connection with a retail crypto lending product the company offered to nearly 600,000 investors, as per Reuters.

BlockFi believes its Chapter 11 cases will enable the company to stabilise its business and maximise value for all stakeholders.

“Acting in the best interest of our clients is our top priority and continues to guide our path forward,” BlockFi said in a blog post.