Crypto lender BlockFi files for bankruptcy, cites FTX exposure
Last edited Mon Nov 28, 2022, 06:27 PM - Edit history (3)
Source: Reuters
Nov 28 (Reuters) - Cryptocurrency lender BlockFi has filed for Chapter 11 bankruptcy protection, it said on Monday, the latest crypto casualty after the firm was hurt by exposure to the spectacular collapse of the FTX exchange earlier this month. The filing in a New Jersey court comes as crypto prices have plummeted. The price of bitcoin , the most popular digital currency by far, is down more than 70% from a 2021 peak.
BlockFis Chapter 11 restructuring underscores significant asset contagion risks associated with the crypto ecosystem," said Monsur Hussain, senior director at Fitch Ratings. New Jersey-based BlockFi, founded by fintech executive-turned-crypto entrepreneur Zac Prince, said in a bankruptcy filing that its substantial exposure to FTX created a liquidity crisis. FTX, founded by Sam Bankman-Fried, filed for protection in the United States earlier in November after traders pulled $6 billion from the platform in three days and rival exchange Binance abandoned a rescue deal.
"Although the debtors exposure to FTX is a major cause of this bankruptcy filing, the debtors do not face the myriad issues apparently facing FTX," said the first day bankruptcty filing by Mark Renzi, managing director at Berkeley Research Group, the proposed financial advisor for BlockFi. "Quite the opposite." BlockFi said the liquidity crisis was due to its exposure to FTX via loans to Alameda, a crypto trading firm affiliated with FTX, as well as cryptocurrencies held on FTX's platform that became trapped there. BlockFi listed its assets and liabilities as being between $1 billion and $10 billion.
Renzi said that BlockFi had sold a portion of its crypto assets earlier in November to fund its bankruptcy. Those sales raised $238.6 million in cash, and BlockFi now has $256.5 million in cash on hand. In a court filing on Monday, BlockFi listed FTX as its second-largest creditor, with $275 million owed on a loan extended earlier this year. It said it owes money to more than 100,000 creditors. The company also said in a separate filing it plans to lay off two-thirds of its 292 employees.
Read more: https://www.reuters.com/technology/crypto-lender-blockfi-files-bankruptcy-protection-2022-11-28/
Article updated.
Previous headlines/articles -
Nov 28 (Reuters) - Cryptocurrency lender BlockFi has filed for Chapter 11 bankruptcy protection, it said on Monday, the latest crypto casualty following the spectacular collapse of the FTX exchange earlier this month. The filing in a New Jersey court comes as crypto prices plummet. The price of bitcoin , the largest digital currency by far, 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. New Jersey-based BlockFi, founded by Zac Prince, said in a bankruptcy filing that its substantial exposure to FTX created a liquidity crisis. FTX filed for protection in the United States earlier in November after traders pulled $6 billion from the platform in three days and rival exchange Binance abandoned a rescue deal.
In a court filing on Monday, BlockFi listed FTX as its second-largest creditor, with $275 million owed on a loan extended earlier this year. It said it owes money to more than 100,000 creditors. The company also said in a separate filing it plans to lay off two-thirds of its 292 employees. Under a deal signed with FTX in July BlockFi was to receive a $400 million revolving credit facility while FTX got an option to buy it for up to $240 million.
BlockFi's bankruptcy filing also comes after two of BlockFi's largest competitors, Celsius Network and Voyager Digital , filed for bankruptcy in July citing extreme market conditions that had resulted in losses at both companies. Crypto lenders, the de facto banks of the crypto world, boomed during the pandemic, attracting retail customers with double-digit rates in return for their cryptocurrency deposits. On the flip side, institutional investors such as hedge funds looking to make leveraged bets paid higher rates to borrow the funds from the lenders, who profited from the difference.
Nov 28 (Reuters) - Major cryptocurrency lender BlockFi has filed for Chapter 11 bankruptcy protection along with eight affiliates, it said on Monday, the latest crypto casualty to follow the spectacular collapse of the FTX exchange earlier this month. The filing in a New Jersey court comes as crypto prices plummet, with bitcoin down more than 70% from a 2021 peak.
New Jersey-based BlockFi had links with FTX, which filed for protection in the United States earlier in November after traders pulled $6 billion from the platform in three days and rival exchange Binance abandoned a rescue deal.
In a court filing on Monday, BlockFi listed FTX as its second-largest creditor, with $275 million owed on a loan extended earlier this year. It said it owes money to more than 100,000 creditors. Under a deal signed with FTX in July BlockFi was to receive a $400 million revolving credit facility while FTX got an option to buy it for up to $240 million.
BlockFi's bankruptcy filing also comes after two of BlockFi's largest competitors, Celsius Network and Voyager Digital, filed for bankruptcy in July citing extreme market conditions that had resulted in losses at both companies.
Original article -
In a court filing, New Jersey-based BlockFi said it owes money to more than 100,000 creditors. It listed crypto exchange FTX as its second-largest creditor, with $275 million owed on a loan extended earlier this year.
The company's largest creditor is Ankura Trust, a company that represents creditors in stressed situations, and is owed $729 million.
BlockFi had earlier paused withdrawals from its platform and acknowledged it had "significant exposure" to FTX and its associated entities. The move comes weeks after FTX filed for U.S. bankruptcy protection and its founder Sam Bankman-Fried resigned as chief executive.
Ocelot II
(115,894 posts)yankee87
(2,181 posts)So glad I was talked out of putting money in crypto.
Historic NY
(37,454 posts)that isn't suppose to exist.
sarcasmo
(23,968 posts)zuul
(14,628 posts)They are typically a bunch of dumb shits who want to "get rich quick without really trying."
OneCrazyDiamond
(2,032 posts)Software can be marketable. Crypto?...no clue.
IronLionZion
(45,559 posts)I don't have any interest in digital currencies. It's inherent volatility in valuation make it unsuitable to use for purchasing anything.
There are explainers online from reputable sources if you're genuinely interested in how it works. You're not missing out.
Kennah
(14,337 posts)Basic due diligence wasn't done
justhanginon
(3,290 posts)3auld6phart
(1,053 posts)ashredux
(2,609 posts)You dont have concrete possession of all your money. Most is in a bank, but not in cash. Our monetary system is built on a base of an entire nation. But most of your money cannot be found, cannot be held, or it is all dots on a computer screen, so to speak.
Crypto dollars were only dots on the computer screen. There was nothing really to back it up. It goes bust, you lose everything. The United States is not going to go bust.
"Our monetary system is built on a base of an entire nation."
I've tried to explain this to several Cryptofans and they generally don't get it...shockingly. They also don't get that volatile things like Bitcoin don't make for an actual currency...far too driven by speculation.
ProfessorGAC
(65,232 posts)...is over $240 trillion in total capital. That's a pretty solid base.
That versus a digital will-o-the-wisp of nothingness.
Hmmm...which one wins the credibility race?
republianmushroom
(13,743 posts)FakeNoose
(32,806 posts)Crypto is for people who can't take their money to regular banks. That makes it real easy to steal, am I right?
Response to BumRushDaShow (Original post)
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Renew Deal
(81,882 posts)Orrex
(63,232 posts)Can't say that I'm glad that tech-bros are losing tons of money, but...
Oh, heck. Sure I can!
If only they could have known that their virtual Monopoly money scheme would obviously crumble into nothing.
If only...
machoneman
(4,013 posts)SWBTATTReg
(22,176 posts)and balances that should be in place, to check upon exposures to investors in case things got really bad (like they are now).
IMHO, republicans were demanding that all safeguards be removed that Liz Warren spearheaded years ago (Consumer Financial Protection Bureau as part of the Dodd-Frank financial reform legislation. The main goal of the CFPB was to police credit lenders and prevent consumers from unwittingly signing up for risky loans.).
Liz W. is in front again w/ demanding better safeguards to be put in place after this crypto disaster. I love to see how republicans view this disaster now, being that they were demanding removal of safeguards from the CFPB that could have reduced the negative exposure of investors to this disaster?
George Glover
Thu, November 24, 2022 at 10:19 AM: FTX's collapse shows the need for proper crypto regulation, US senator Elizabeth Warren said Tuesday.REUTERS/Joshua Roberts. "FTX's implosion should be a wake-up call. Regulators must enforce the law before more people get cheated," she said. Warren criticized cryptos usage in money laundering and its high environmental cost.
FTX's sudden implosion shows there's a need for proper crypto regulation before digital assets cause wider economic damage, according to Elizabeth Warren. The Massachusetts senator said Tuesday that financial watchdogs need to intervene in the space to protect retail investors, after the sudden collapse of Sam Bankman-Fried's exchange erased at least $1.7 billion in customers' funds.
SouthernDem4ever
(6,617 posts)Those pesky laws protecting consumers are a burden on industry and finance. Leave us alone so we can steal with impunity.