Cryptocurrency Platform BlockFi Files For Bankruptcy After FTX Bankruptcy
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Cryptocurrency Platform BlockFi Files For Bankruptcy After FTX Bankruptcy

-It assures that it will focus on recovering all the obligations that third parties have contracted with it

The cryptocurrency lending platform BlockFi declared bankruptcy this Monday in the state of New Jersey (USA), in a new blow to the world of digital currencies after the bankruptcy of the giant FTX.

BlockFi, which was once valued at $3 billion, was founded in 2017 by Zac Prince and Flori Marquez and aimed to lend money to clients using their cryptocurrency assets as collateral.

In a statement, the company assures that it has voluntarily filed for Chapter 11 of the United States Bankruptcy Code intending to achieve restructuring.

BlockFi had stated that it had “significant exposure” to FTX and its investment arm Alameda Research, from which it obtained a loan of $400 million, which gave FTX the option to purchase the platform.

The Wall Street Journal maintains that BlockFi was one of many troubled cryptocurrency firms that struck bailout deals with the ill-fated FTX in recent months.

Recover all obligations

In the note published this Monday, BockFi assures that it will focus on recovering all the obligations those third parties have contracted with it, among which it mentions FTX. In this sense, he has warned that, due to the bankruptcy process in which FTX is also immersed, this procedure may be delayed.

In parallel, the company has announced the beginning of a plan to “considerably reduce expenses, including labor costs”, although it has not offered more details in this regard.

BlockFi has $256.9 million in cash, which it hopes will be enough to “support certain operations during the restructuring process,” according to the statement.

Chain reaction

BlockFi’s bankruptcy follows that of FTX, which was once valued at $32 billion and could have more than a million creditors around the world.

So far, the platform has admitted that it owes more than $3 billion to its fifty largest creditors.

During the start of FTX’s bankruptcy process, its new managers denounced a “complete absence of corporate controls” and a lack of “reliable financial information” and assured that a “substantial amount” of the company’s assets could have been stolen or they’re missing.

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