Skip to main content

Crypto continues its freefall as another major company declares bankruptcy

The first crypto domino from the FTX fallout drops

The crypto contagion that was FTX has claimed its first victim. Per Reuters, the crypto trading platform BlockFi filed for Chapter 11 bankruptcy this past Monday. In doing so, the BlockFi bankruptcy aims to one, clear itself of debt in order to repay creditors, and two, reestablish itself as a legitimate platform for customers and investors.

BlockFi webpage screenshot with bankruptcy banner.
Matthew Denis

According to The Wall Street Journal, Alameda Research, the hedge fund that was supposed to stand as collateral for FTX, defaulted on a $680 million loan to BlockFi when FTX collapsed. Realizing that recovery without bankruptcy created an instant liquidity crisis for BlockFi, founders Zac Prince and Flori Marquez were quick to file for insolvency in order to make sure that the platform would eventually be able to pay its remaining debts. The blockchain firm views this as a reorganization as opposed to a disintegration.

“Rest assured, we will continue to work on recovering all obligations owed to BlockFi as promptly as practicable,” NPR reported the company said in a letter to customers.

This is in direct contrast to the billions that FTX will almost certainly never be able to return to lenders and investors. While BlockFi ceased withdrawals and requested customers halt deposits, this does not mean they do not intend to honor these investments. On Tuesday, BlockFi attorney Joshua Sussberg asserted that the platform will pursue a court ruling to permit investors in the BlockFi Wallet program to withdraw money during the bankruptcy proceedings (per Reuters).

“If it’s in your wallet, it stays in your wallet,” Sussberg said.

During the hearing, Reuters reported that U.S. Bankruptcy Judge Michael Kaplan approved BlockFi’s continued employee payments, managing bank accounts, and additional steps to maintain day-to-day operations during bankruptcy proceedings.

The WSJ found that BlockFi is hopeful for a quick exit from chapter 11, enabling a swift subsequent recovery for customers and investors. This will be a challenge seeing as the crypto firm’s “top 10 creditors alone are owed close to $1.2 billion,” according to the WSJ’s examination of its filings with the U.S. Bankruptcy Court in Trenton, N.J. The sum total of Blockfi’s liabilities is likely much more as the blockchain company also owes about $730 million to Ankura Trust Company LLC, the trustee for its U.S. interest-earning customer accounts.

These interest-bearing incentivized accounts already got BlockFi into hot water, which led to a $100 million settlement in February. BlockFi agreed to fork over a $50 million fine to the Securities and Exchange Commission, and $50 million to state regulators for what the overseers deemed unregistered incentives.

While the crypto contagion released by FTX could mean a significant restructuring of BlockFi and a possible change of ownership, industry insiders still view this as a “turning point” — a rooting out of a necessary evil that will clear the way for a brighter blockchain future.

Editors' Recommendations

Matthew Denis
Former Digital Trends Contributor
Matt Denis is an on-the-go remote multimedia reporter, exploring arts, culture, and the existential in the Pacific Northwest…
The 11 best Robert De Niro movies to stream right now
From Raging Bull to The Godfather Part II, these are the roles that have defined De Niro's long career
Robert De Niro in Goodfellas

There are few actors working today who can match the career that Robert De Niro has had. Some, like Brad Pitt or even George Clooney, have been in plenty of great movies, but even they don't stack up to the kind of career that De Niro has had over the last half a century. De Niro's success can be chalked up, at least in part, to his collaboration with great directors. De Niro has been in some of Martin Scorsese's best movies, and Scorsese isn't the only director who knows how to use him.

Really, though, it's De Niro himself who deserves a lot of the credit. Although he's been in plenty of schlock, the best movies of his career are up there with the best movies ever made. When he emerged on the scene, De Niro showed off his ability to play a range of different types, and his skills have only deepened as the years have gone by. Keep reading and find out what Robert De Niro movies you cannot miss if you have already.

Read more
The 12 best Adam Sandler movies (they’re not all comedies)
From Uncut Gems to Happy Gilmore, these are the films that defined Sandler's career to date
Henry Winkler (left) and Adam Sandler in The Waterboy

 

What is there left to say about Adam Sandler? The Sand-Man has been a fixture of pop culture for well over 20 years, having worked first on Saturday Night Live and then broken out in a series of farcical, wonderful comedies in the years after his departure. He's one of the biggest comedy stars on the planet, and he's been part of some of the best comedy movies. He's also made plenty of movies that nobody should be forced to watch twice.
For every movie that has immediately been relegated to the trash bin of history, though, Sandler has also made an indelible comedy or a surprising turn into drama. While he could have emerged looking a little bit like a one-trick pony who relies on funny voices for cheap laughs, Sandler turned out to be far more complicated than that. He is a genuinely great actor whenever he wants to be. The rest of the time, he's content to make silly movies with his best friends. Here are the best Adam Sandler movies you need to watch now.

Read more
Take a lot of handwritten notes? This gadget will change your life
A man uses the reMarkable 2.

There is an overwhelming desire to return to paper from people of all walks of life lately. Screens have invaded us. But what we're often not seeing is an actual return to paper. It's not necessarily as convenient as we remember it to be, and a lot of the return to paper is about desire, not action.

Should you also have the desire to return to the physical but also have an addiction to screens, let me introduce you to the reMarkable 2. It's a sort of notebook, drawing tablet, document reader hybrid that is considered one of the best tablets for handwritten notes. Here are the top ways its been helping us.
It helps me remember things
Let's start this one out with a list:

Read more