US-based crypto lender BlockFi has filed for bankruptcy, as the fall of FTX continues to impact the industry.
On Monday, the company has filed for Chapter 11 protection in New Jersey, where it is based. BlockFi claimed more than 100,000 creditors, with the firm’s liabilities ranging from $1 billion to $10 billion.
BlockFi’s filing stated that it will use the Chapter 11 process to “focus on recovering all obligations owed to BlockFi by its counterparties, including FTX and associated corporate entities.” The statement also noted that the recoveries are likely to be delayed by FTX’s own bankruptcy.
Chapter 11 bankruptcy enables a company to continue operating while working out a plan to repay creditors.
Earlier this month, FTX – a popular crypto exchange firm filed for bankruptcy following a run on deposits left the company owing $8 billion. The incident triggered investigations by the Securities and Exchange Commission and the Justice Department, which is looking into whether FTX misappropriated customer funds when it lent billions of dollars to crypto hedge fun Alameda Research.
BlockFi worked with FTX US after it took an $80 million hit from the bad debt of crypto hedge fund Three Arrows Capital, which collapsed after the TerraUSD stablecoin crash in May.
The company had significant exposure to the empire of companies founded by former FTX Chief Executive Officer Sam Bankman-Fried.
BlockFi said in the statement that it had around $257 million of cash on hand, and is starting an “internal plan to considerably reduce expenses, including labour costs.”
