Days after halting withdrawals due to the effects of the FTX exchange bankruptcy, cryptocurrency lender BlockFi applied for bankruptcy protection on Monday. According to reports, BlockFi has over $257 million in cash. According to BlockFi’s leadership, there are more than 100,000 creditors.
The Securities and Exchange Commission (SEC), which has an unsecured claim for $30 million, and West Realm Shires Inc., doing business as FTX US, which has an unsecured claim for $275 million, are the principal creditors of the company. The majority of the other 50 principal creditors’ names remain hidden.
To survive in the beginning of the year, the company had to liquidate a sizable client and rely on a line of credit from FTX. BlockFi issued a warning to its clients not to make deposits into its wallet or interest accounts after the stoppage of withdrawals.
After raising $350 million at a $3 billion valuation in March 2021, the lender was anticipated to raise money at a $1 billion valuation in June. The business was considering an IPO with a potential $500 million fundraising as recently as last July.
However, as part of a settlement with the SEC and numerous state authorities over claims that its high-yield crypto loan product broke state and federal privacy laws, the business was forced to pay $100 million in February securities. BlockFi also had to register its BlockFi Yield product with the SEC as a condition of this agreement.
In June, the firm reduced its employees by nearly a quarter when the bitcoin market fell.