BlockFi says it is ‘the antithesis of FTX’ in bankruptcy hearing, aims to make customers whole
- As the first direct casualty of FTX’s collapse, BlockFi sought to distance itself from that exchange by saying it did not face the same management issues
- The company’s attorney said it seeks to return customer funds quickly and to allow those in the BlockFi Wallet programme to withdraw during the bankruptcy case
BlockFi, the first direct casualty of crypto exchange FTX’s collapse, told a US bankruptcy judge on Tuesday that the US cryptocurrency lender was “the antithesis of FTX” and that it would seek to return customer funds as quickly as possible.
BlockFi filed for Chapter 11 protection on Monday, citing FTX’s collapse and volatility in the crypto markets. Earlier in November, BlockFi had paused withdrawals from its platform amid uncertainty about FTX’s stability.
BlockFi attorney Joshua Sussberg went to great lengths to distance BlockFi from FTX at the company’s first bankruptcy hearing in Trenton, New Jersey. While detailing the companies’ complex financial relationship, Sussberg emphasised BlockFi did not face the myriad issues plaguing FTX, which spectacularly imploded earlier this month, sparking fears of contagion across the industry.
FTX’s bankruptcy filings have revealed missing assets and a complete failure of corporate controls – whereas BlockFi had mature and consistent leadership, hired the right experts, and implemented the proper procedures and protocols, Sussberg said.
BlockFi was “shocked and dismayed” to learn about FTX’s poor management, Sussberg told US Bankruptcy Judge Michael Kaplan.
While giving Kaplan an overview of BlockFi’s history, Sussberg described the multiple ways in which the company and FTX were entangled.
BlockFi had loaned US$680 million to FTX’s affiliated hedge fund Alameda Research as part of BlockFi’s broader lending business prior to the crypto crash in May.