Crypto meltdown: BlockFi has also filed for chapter 11 bankruptcy

According to a press release, BlockFi has filed for chapter 11 bankruptcy.

The loan platform is the most recent casualty of an industry-wide epidemic that started with the demise of the cryptocurrency exchange FTX.

BlockFi has approximately 100,000 estimated creditors and liabilities worth between $1 and $10 billion, according to the document. The report attests to the company’s cash on hand of $256.9 million.

“As part of our restructuring efforts, we will focus on recovering all debts owing to BlockFi by counterparties, including FTX,” said a statement posted on BlockFi’s Twitter account.

Our main priority is serving the needs of our clients, and this continues to direct our progress. Since Chapter 11 is a public process, we will keep in touch with our clients to make sure they hear from us directly.

Another lender has filed for bankruptcy in recent months as a result of the industry-wide collapse, as evidenced by this filing. Celsius filed for bankruptcy in July of this year, and most recently, Genesis stopped allowing withdrawals, causing Gemini Earn to do the same.

A source who talked with Decrypt said that in addition to the bankruptcy procedures, BlockFi will be letting go of a “significant chunk” of its workforce.

Due to the ripple effects of the failure of cryptocurrency hedge fund Three Arrows Capital, BlockFi needed a bailout from FTX in June 2022. FTX quickly bought BlockFi.

The recent collapse of FTX and the associated Alameda Research hedge fund raised concerns about BlockFi’s capacity to protect customer assets. These only got worse after BlockFi admitted they had no more information on the FTX situation and started restricting users on their platform, including stopping withdrawals.

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