Crypto Company BlockFi Files For Bankruptcy

Facts

• BlockFi, a New Jersey-based cryptocurrency lender, announced Monday it has filed for Chapter 11 bankruptcy protection after the firm was caught up in the recent collapse of the FTX exchange.
• In June, Sam Bankman-Fried's FTX bailed out Zac Prince's BlockFi with a loan of $250M and later partnered with the cryptocurrency lender. But FTX filed for bankruptcy on Nov. 11.
• In its bankruptcy filing, BlockFi noted it had more than 100k creditors with assets and liabilities ranging from $1B to $10B. It also owes $30M to the US Securities and Exchange Commission.
• The company listed an outstanding $275M loan to FTX – its second-largest creditor – which it blames for creating a liquidity crisis for the firm. Meanwhile, BlockFi owes $729M to Ankura Trust, its largest creditor.
• Earlier this month, BlockFi sold a portion of its crypto assets to raise $238.6M to fund its bankruptcy. The company now reportedly has $256.5M in cash on hand.
• BlockFi, which suspended withdrawals a few weeks ago, is set to pay back its Wallet customers in full as part of its initial restructuring plan. Its account holders and creditors are expected to receive a combination of cryptocurrency, cash, and new equity shares.

Sources: Bloomberg, Decrypt, BBC News, Financial Express, Reuters, and XM.

Narratives

• Narrative A, as provided by India Today. This is just one of many digital-asset firms to collapse, demonstrating that stringent government regulations for transactions in virtual coins are necessary. An unregulated business environment may have irreversible and disastrous economic consequences — for lenders, buyers, and the state.
• Narrative B, as provided by CNN. The whole point of cryptocurrency is its decentralized structure and immunity to being governed by wealthy conglomerates or authoritarian governments. It's essential to keep cryptocurrency technology as it's supposed to be – decentralized and transparent – to avoid further crypto explosions and bankruptcies.

Predictions