Technology

New cryptocurrency earthquake: BlockFi puts the key under the door – Geeko

The crypto lending platform collapsed after FTX and filed for bankruptcy weeks after suspending withdrawals.

It’s the new domino that’s falling. FTX’s descent into hell has gotten the better of BlockFi, a cryptocurrency lending company. The company has just filed for Chapter 11 bankruptcy protection, allowing the platform to maintain minimal activity while waiting for a buyer. BlockFi’s position was already precarious after Terra’s collapse, but this new blow ended the firm’s hopes.

worthless tokens

It was in the press release that BlockFi filed for bankruptcy to help “stabilize its business.” The procedure applies to BlockFi and all of its subsidiaries. In parallel, the platform also indicates that it is launching “an internal plan aimed at significantly reducing costs, in particular labor costs.” In other words, the company is preparing a reduction plan.

As a reminder, BlockFi announces the suspension of withdrawals from November 11, the day the FTX stock exchange went bankrupt. That undermines the confidence of its investors. There seems to be good reason for this, as it turns out that the company borrowed $250 million from FTX… in FTT tokens. With the fall in the value of the cryptocurrency (-95%), BlockFi found itself under water.

Chasing Sam Bankman-Freed

To date, the platform has $256.9 million in cash. According to BlockFi, these funds are “enough to support certain operations in the restructuring process.” In parallel, the company plans to focus on recovering all liabilities to it, “including FTX and related entities.”

So, the company has already filed a case against the founder of FTX Sam Bankman-Fried. The dispute concerns his shares of Robinhood, i.e. 7.6% for a total amount of about $650 million. The fact is that these shares were pledged as collateral for payment. However, when FTX filed for bankruptcy, BlockFi immediately demanded the return of the deposit. However, according to the company, the transfer of shares never took place.

The situation is therefore urgent for BlockFi, whose bankruptcy filing lists at least 100,000 creditors. Among them are the Securities and Exchange Commission (SEC) up to $30 million and… FTX US up to $275 million.

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