BlockFi Headed to Bankruptcy After FTX Exposure
A Chapter 11 bankruptcy petition was filed by BlockFi on Nov. 28. The filing relates to the company as well as its eight subsidiaries. Following FTX's collapse, the financial health of the company has been in the spotlight for several days.
Crypto company claims it plans 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.”
Over the course of the year, price of bitcoin, the most popular digital currency by far, has plummeted more than 70% from its peak in 2021.
FTX had provided the company with a rescue deal earlier this year as cryptocurrency prices dropped. However, the crypto exchange ran into problems after people began withdrawing money from the exchange due to concerns about its financial stability. The firm was declared bankrupt after former boss Sam Bankman-Fried resigned.
During the filing, the company reported more than 100,000 creditors, as well as $1 billion to $10 billion in assets and liabilities. The company owes FTX $275 million, according to its filing.?
In addition, there's a $30 million debt to the U.S. Securities and Exchange Commission and it shows a debt of $999,650 to an unidentified creditor.
A boom in cryptocurrency lending occurred during the pandemic, attracting retail customers with double-digit interest rates in exchange for cryptocurrency deposits. Due to a lack of collateral, some crypto lenders suffered large losses.
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