Amid struggles by several Web3 projects to surmount the effects of FTX collapse, crypto lending platform BlockFi has been caught in the quagmire following its filing for chapter 11 bankruptcy on Nov. 28.
BlockFi, while filing in the United States Bankruptcy Court for the District of New Jersey, revealed that the move was instigated by its exposure to the collapsed FTX exchange.
According to a recent disclosure, BlockFI holds approximately $256.9 million in cash. During its bankrupt period, it is willing to pay employee wages and continue employee benefits as contained in the motion being filed.
The firm is always willing to establish a Key Employee Retention Plan during the period in order to ensure that the company has effective internal resources that will aid business-critical functions.
Recall that BlockFi entered a $400 million partnership deal with FTX US in June 2021 with a view to covering the credit facility. Thus, it was no surprise that the FTX collapse significantly affected the firm.
On Nov. 11, BlockFi halted withdrawals in the wake of the FTX crisis. Later on, it updated on its website that all available options have been explored and the viable option in order to stabilize the business and continue to maximize stakeholders’ interest is to file for Chapter 11 bankruptcy.
The company revealed that parts of its restructuring plan will be devoted to recovering all obligations entitled to FTX by counterparties, including FTX.
BlockFi Sues FTX’s Bankman-Fried Company
In a related development, the bankrupt crypto lending platform BlockFi has also sued Sam Bankman-Fried’s investment company, asking for a turn over of its shares in Robinhood as collateral in line with an initial agreement.
The lawsuit filed on Nov. 28 was specifically piqued against Sam Bankman-Fried’s holding company Emergent Fidelity Technologies
BlockFi argued that Emergent agreed to service a payment schedule with BlockFi based on Nov. 9 pledge agreement which has not been honored.
It is instructive to note that Bankman-Fried in May bought 7.6% stake in the online brokerage firm Robinhood, totalling $648 million through his Emergent investment company. This lawsuit will be administered alongside BlockFi bankruptcy filing.
