BlockFi files for bankruptcy, citing FTX exposure, sues Bankman-Fried holding company
- New Jersey-based BlockFi filed for bankruptcy after exposure to FTX led to a liquidity crisis, but said it does not face the ‘myriad issues’ as that exchange
- BlockFi also sued a holding company for FTX founder Sam Bankman-Fried to recover shares in Robinhood pledged as collateral three weeks ago
Cryptocurrency lender BlockFi has filed for Chapter 11 bankruptcy protection, it said on Monday, the latest industry casualty after the firm was hurt by exposure to the spectacular collapse of the FTX exchange earlier this month.
The filing in a New Jersey court comes as crypto prices have plummeted. The price of bitcoin, the most popular digital currency by far, is down more than 70 per cent from a 2021 peak.
“BlockFi’s Chapter 11 restructuring underscores significant asset contagion risks associated with the crypto ecosystem,” said Monsur Hussain, senior director at Fitch Ratings.
“Although the debtors’ exposure to FTX is a major cause of this bankruptcy filing, the debtors do not face the myriad issues apparently facing FTX,” said the bankruptcy filing by Mark Renzi, managing director at Berkeley Research Group, the proposed financial adviser for BlockFi. “Quite the opposite.”