Bitcoin Languishes Near $16K as BlockFi Bankruptcy Keeps Crypto Credit Contagion Concerns in Focus
US-based cryptocurrency lending and borrowing platform BlockFi, formerly one of the biggest in the cryptocurrency space, filed for Chapter 11 bankruptcy protection on Monday. The company indicated that it hopes to restructure and will continue operations for the time being.
https://twitter.com/BlockFi/status/1597253469374910466
The platform, which gives depositors yield on their crypto holdings, had halted withdrawals earlier this month amid uncertainty due to cryptocurrency exchange FTX’s spectacular collapse.
According to the company’s bankruptcy filing, BlockFi owes money to at least 100,000 creditors. Its largest creditor is Ankura Trust Company, to which BlockFi owes $730 million in unsecured claims. Other large creditors include West Realm Shires Inc., FTX US’s legal name, to which BlockFi owes $275 million, and the SEC, to which BlockFi owes $30 million.
BlockFi had agreed to pay the SEC and several state regulators a total of $100 million earlier this year as part of a settlement over allegations that its crypto yield product had violated US state and federal laws. The settlement at the time forced BlockFi to register its yield product with the SEC.
BlockFi’s Monday bankruptcy filing rounds off what has been a rocky year for the cryptocurrency lending platform. After the abrupt collapse of the Luna cryptocurrency ecosystem back in May and the liquidation of an unnamed large client (who many think could have been now-defunct crypto hedge fund Three Arrows Capital), BlockFi had to get a credit line from FTX to survive.
A $250 million agreement soon morphed into a $400 million facility that gave FTX the option to buy BlockFi, should they want.
https://twitter.com/BlockFiZac/status/1542934040092856321
That lifeline back in
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