Crypto firm BlockFi files for bankruptcy weeks after FTX collapse

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ATLANTA, GEORGIA – NOVEMBER 10: In this photo illustration, the FTX app is seen on a phone on November 10, 2022 in Atlanta, Georgia. Binance, the world’s largest cryptocurrency firm, agreed to acquire FTX, another large cryptocurrency exchange, in a rushed sale in order to prevent a liquidity crisis, which is known as the “Lehman Moment” in the crypto industry. (Photo Illustration by Michael M. Santiago/Getty Images)

Cryptocurrency firm BlockFi filed for bankruptcy on Monday, just weeks after the high-profile collapse of cryptocurrency exchange FTX.

BlockFi and eight of its affiliates filed for Chapter 11 in the U.S. Bankruptcy Court for the District of New Jersey, according to a news release.

New Jersey-based BlockFi has about 100,000 creditors and has liabilities and assets both ranging from $1 billion to $10 billion, according to court filings. 

Mark Renzi with the Berkeley Research Group, a financial adviser for the crypto company, said that “the BlockFi management team and board of directors immediately took action to protect clients and the company” after the collapse of FTX.

“BlockFi looks forward to a transparent process that achieves the best outcome for all clients and other stakeholders,” Renzi said in a statement.

BlockFi has already paused activity on the cryptocurrency exchange. The company says it has more than $256 million in cash on hand, which it expects to use to support operations during the restructuring process.

Some had speculated that BlockFi would file for bankruptcy because of its close association with FTX, which also filed for bankruptcy this month. The Wall Street Journal reported earlier this month that BlockFi was preparing to do so.

In a blog post last week, BlockFi said it had “significant exposure to FTX and associated corporate entities,” including financial obligations and undrawn amounts of credit.

The shocking downfall of FTX and its former CEO Sam Bankman-Fried has led to congressional hearings and a lawsuit filed by former investors who say they lost billions of dollars.

The collapse of FTX was preceded by two other crypto bankruptcies at Voyager and Celsius.

Updated at 12:37 p.m.

Tags Bankruptcy Blockfi crypto crypto market cryptocurrency FTX New Jersey
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