Crypto Lending Platform, BlockFi Files For Bankruptcy; Here’s What You Need To Know
Following the FTX crash and the liquidity crunch on its firm, BlockFi, a crypto lending firm, has filed for bankruptcy protection due to the intense liquidity crunch.
Following the FTX crash and meltdown earlier this year, BlockFi, the crypto lending firm, has filed for bankruptcy. It had previously suspended withdrawals on its platform due to the massive liquidity crunch it was experiencing.
BlockFi’s Insolvency
The crypto lending firm has filed for bankruptcy after suspending withdrawals. This comes on the heels of FTX’s tragic meltdown in early November.
BlockFi announced that it would seek Chapter 11 bankruptcy protection, indicating that it had no intention of permanently ceasing operations but hoped to regain its standing and continue operations in the future.
According to the firm’s report, they have a long list of creditors including well-known firms and a fund range of $1 to 10 billion in assets.
The majority of the top creditors’ names remained unknown to the public.
However, the Ankura Trust Company is number one on the list of creditors, with over $700 million in unresolved claims.
Terrible Year For Crypto Firms
Following the crashes that have occurred this year, including the most recent one, FTX, which successfully turned the market upside down, the BlockFi company has had a very tumultuous year.
BlockFi liquidated an investor at the beginning of this year and needed funds to regain its standing; FTX stepped in to save the day.
The exchange cautioned all investors not to make additional deposits into the company during this time in conjunction with the announcement of the suspension of asset withdrawal.
The company planned to go public this July and also intended to venture into a $500 million fundraise for a period of one and a half years.
Unfortunately, this was not possible because the company was delegated to pay a $100 million settlement fee to the SEC and other regulators in February for breaking the rules governing profit yields in cryptocurrency lending firms.
Because of the poor market conditions and catastrophic decline, BlockFi had to lay off almost half of its workforce in June.
Also BlockFi moved to halt all withdrawals on its platform in response to the FTX crash and the profound impact it had on its company.
Other exchanges and lending firms have also been severely impacted by this meltdown and market state. Most have gotten liquidated and crashed while others hold on for dear life.
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