BlockFi Inc Files For Bankruptcy In United States

November 28, 2022

BlockFi Inc and eight of its affiliates filed for bankruptcy in the United States and said “in parallel with these chapter 11 cases, BlockFi International Ltd. a Bermuda incorporated company, filed a petition with the Supreme Court of Bermuda for the appointment of joint provisional liquidators.”

Their website said, “This action follows the shocking events surrounding FTX and associated corporate entities [FTX[ and the difficult but necessary decision we made as a result to pause most activities on our platform.”

A statement from the organisation said, “BlockFi Inc. and eight of its affiliates [BlockFi] today commenced voluntary cases under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of New Jersey to stabilize its business and provide the Company with the opportunity to consummate a comprehensive restructuring transaction that maximizes value for all clients and other stakeholders.

“As part of its restructuring efforts, the Company will focus on recovering all obligations owed to BlockFi by its counterparties, including FTX and associated corporate entities [FTX]. Due to the recent collapse of FTX and its ensuing bankruptcy process, which remains ongoing, the Company expects that recoveries from FTX will be delayed.”

“With the collapse of FTX, the BlockFi management team and board of directors immediately took action to protect clients and the Company,” said Mark Renzi of Berkeley Research Group, the Company’s financial advisor.

“From inception, BlockFi has worked to positively shape the cryptocurrency industry and advance the sector. BlockFi looks forward to a transparent process that achieves the best outcome for all clients and other stakeholders.”

The spokesperson said, “To ensure a smooth transition into Chapter 11, BlockFi is filing with the Court a series of customary motions to allow the Company to continue to operate its business. These ‘first day’ motions include requests to pay employee wages and continue employee benefits without disruption, for which the Company expects to receive Court approval, as well as to establish a Key Employee Retention Plan to ensure the company retains trained internal resources for business-critical functions during the chapter 11 process. The Company today also initiated an internal plan to considerably reduce expenses, including labor costs.

“Platform activity continues to be paused at this time. BlockFi has US$256.9 million in cash on hand, which is expected to provide sufficient liquidity to support certain operations during the restructuring process.”

“In parallel with these chapter 11 cases, BlockFi International Ltd. a Bermuda incorporated company, filed a petition with the Supreme Court of Bermuda for the appointment of joint provisional liquidators pursuant to section 161[e] of Bermuda’s Companies Act, 1981 in the near term. BlockFi currently anticipates that client claims will be addressed through the Chapter 11 process.”

CNN report, “The New Jersey-based company was one of several that received financial support from Bankman-Fried over the summer, as falling crypto prices threatened to take down key players in the digital asset ecosystem. In July, BlockFi secured a $400 million financial lifeline from FTX.

“The fallout from FTX’s decline is ricocheting throughout the crypto industry. Soon after FTX’s collapse, the lending arm of crypto brokerage Genesis suspended redemptions and new loan originations after an “abnormal” number of withdrawal requests that exceeded its current liquidity, citing market turmoil from the failure of FTX.”

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  1. Newton Adcock says:

    Very interesting, and at the same time very scary financial news article.

    Cision Newswire, on the 24th of January this year, announces that BlockFi selects Bermuda to expand its global operations in to Bermuda.
    The article goes on to say that The Bermuda Monetary Authority has granted its Bermuda subsidiary, BlockFi International Ltd. a class F Digital Assets Business license.

    We would be really interested to know how much Bermuda has ‘in the game’ and how much we are liable to lose as a result of this financial collapse.
    Eagerly looking forward to any and all responses especially from our finance minister and premier, Mr. David Burt.