Cryptocurrency lender BlockFi became the latest casualty of the FTX-crypto meltdown Monday, filing for Chapter 11 bankruptcy protection in the District of New Jersey on Monday. On Nov. 14, BlockFi warned it would no longer operate business as usual following the FTX crash and bankruptcy.
Bermuda-based BlockFi filed customary "first day" motions to continue operations during the restructuring efforts. The firm is focusing on recovering all the obligations it's owed, including those from FTX and its associated entities. However, the company expects those recoveries will be delayed due to FTX's own bankruptcy, it said in a press release.
In the Chapter 11 documents, BlockFi estimated it had more than 100,000 creditors. Its liabilities may range as high as $10 billion.
Its largest creditor is New Hampshire-based Ankura Trust Company, which has an unsecured claim of $730 million. BlockFi hired Ankura in February, which provides indentured trustee services and specializes in stressed situations, according to its website.
The second-largest creditor is FTX US, which has a $275 million unsecured claim. And the SEC has a $30 million unsecured settlement claim. Meanwhile. BlockFi declined to name its other creditors.
BlockFi limited its platform activity and halted client withdrawals on Nov. 11. And that suspension will continue, the company says. It has $256.9 million in cash on hand, which BlockFi expects will provide sufficient activity to support certain operations during the restructuring process.
BlockFi's Failed Bailout
BlockFi was bailed out by FTX US in June after hedge fund Three Arrows Capital couldn't repay a $80 million loan. That followed the TerraUSD stablecoin collapse in May. The FTX bailout included a $400 million revolving credit facility and purchase option for $240 million.
Furthermore, in the company's Nov. 14 update, BlockFi said it had "significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX.US."
You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison
