U.S. cryptocurrency lending specialist BlockFi announced Monday that it has filed for bankruptcy protection in the U.S., attributing its troubles to the collapse of virtual currency exchange platform FTX, which ended this summer. The company, founded in 2017, filed a case in a New Jersey court.
BlockFi was caught in turmoil after the widespread fall in the value of cryptocurrencies in the first half of the year, which caused several companies in the industry to stumble. Some of the customers who invested in BlockFi against the promise of high interest payments later got scared and withdrew their funds. The platform was also affected by the liquidation of the Singaporean investment company Three Arrows Capital, to which it had given a loan.
To overcome this turmoil, FTX offered its help, specifically offering to provide a credit line of 400 million dollars. But FTX has since been mired in its own troubles, with the company filing for Chapter XI of the U.S. Bankruptcy Act on Nov. 11. BlockFi was immediately forced to suspend most of its operations, including withdrawals. “Since this hiatus, our team has explored all strategic options and alternatives available to us.“Said a message on the BlockFi website. Filing under Chapter XI in the state of New Jersey will allow the companyto stabilize the activityand give it to himthe ability to implement a restructuring plan that delivers maximum value to all stakeholders, including our customers“, it was added.
The company plans to focus on collecting debt from other companies, including FTX. He says he has “over 100,000 creditors“. It also shows it has $257 million in cash on hand, which should enable it to fund its operations during the restructuring. FTX’s bankruptcy caused a domino effect, affecting several other companies in the cryptocurrency industry. Coinhouse, a French company that offers savings in cryptocurrencies, thus blocked withdrawals from its passports in mid-November, explaining that some of the partner sites it lent to had blocked the outflow of money themselves.
Source: Le Figaro
I am Ben Stock, a passionate and experienced digital journalist working in the news industry. At the Buna Times, I write articles covering technology developments and related topics. I strive to provide reliable information that my readers can trust. My research skills are top-notch, as well as my ability to craft engaging stories on timely topics with clarity and accuracy.