- According to the customary motion filed, BlockFi is seeking approval to continue operation while the bankruptcy proceeding is going on.
- BlockFi has also filed a lawsuit against Bankman-Fried’s holding company Emergent Fidelity Technologies as it seeks its $575M Robinhood Markets Inc. shares given as collateral.
The crypto market recently saw a heavy bloodbath after Binance pulled out of a deal that could have saved the FTX empire. According to reports, the dramatic failure of the exchange had a massive impact on crypto lending firm BlockFi, forcing it to file a chapter 11 bankruptcy at the United States Bankruptcy Court for the District of New Jersey. According to the bankruptcy proceedings, the company has decided to restructure its operational business unit. This will ensure that what is salvageable for clients and stakeholders is maximized.
BlockFi’s financial advisor Mark Renzi has stated that they expect a transparent process and the best outcome for all stakeholders involved.
From its inception, BlockFi has worked to shape the cryptocurrency industry and advance the sector positively. BlockFi looks forward to a transparent process that achieves the best outcome for all clients and other stakeholders.
The filing discloses that BlockFI has a liability of between $1 billion to $10 billion. In addition, BlockFi seeks to recover all obligations owed by external entities including FTX and its affiliated firms. Interestingly, it expects its recovery from FTX to be delayed due to the current bankruptcy proceedings of the exchange.
BlockFi sues Sam Bankman-Fried for Robinhood shares
It can be recalled that BlockFI announced exposure to FTX and affiliated entities on November 14, a week after the exchange filed for bankruptcy. In July, the firm also announced a deal with the crypto exchange with about $400M credit facility expected from FTX. The crypto exchange also had the option to acquire the lending firm for $240 million. With this exposure, the FTX collapse has seriously worsened BlockFi’s liquidity woes. On November 11, it limited activities on the platform which affected customers’ withdrawals.
BlockFi has also filed a lawsuit against Bankman-Fried’s holding company Emergent Fidelity Technologies as it seeks his Robinhood Markets Inc. shares given as collateral.
According to the customary motion filed, BlockFi is seeking approval to continue operation while the bankruptcy proceeding is going on. Another motion also demands workers’ remuneration to be paid without any challenge. Reports allege that BlockFi has $256 million as cash on hand meant to fund its operational cost amid the ongoing bankruptcy proceedings. It also seeks to minimize costs.
Bradley Duke, founder, and co-chief executive officer at crypto platform ETC Group commented:
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It is unfortunate for BlockFi that the white knight that had offered them a lifeline back in June hasn’t managed to stay solvent themselves, in part because of the massive losses accumulated at Alameda Research stemming from the same event – the collapse of Terra Luna and Three Arrow Capital.
