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.

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…
What UFC champions Sean O’Malley and Aljamain Sterling eat while cutting weight in fight week
Spoiler alert: There's a lot of protein
Chicken breast and broccoli

Whether you're a fan of mixed martial arts (MMA) or just curious about the behind-the-scenes routines of professional fighters, you might be wondering how UFC champions "Suga" Sean O'Malley and Aljamain "Funkmaster" Sterling get ready for fight week.

One slightly controversial part of their prep is cutting weight up to the fight. Weight cutting is a common practice in most combat sports and refers to dropping weight before a competition to compete in a specific weight class.

Read more
Shohei Ohtani all but gone, MLB franchise LA Angels may also lose Mike Trout: Report
Our GM hopes they both move to Chavez Ravine to play for The Dodgers
Shohei Otani playing baseball

The Los Angeles Angels may be on their way to a major team overhaul. Shohei Ohtani, who is one of the best and most innovative two-way players in the history of baseball, has already made it clear that he wants to leave the team, and now, news has broken suggested that Mike Trout, the team's other major star, could also be on his way out the door. Needless to say, losing both of their major stars could have an enormous impact on what the Angels look like moving forward.
Shohei Ohtani is almost definitely leaving
At the end of this season, during which Ohtani has been riddled with injuries, the phenom will be a free agent, and those closest to the league suggest that he's likely to sign with another team. Everyone from the Los Angeles Dodgers to the New York Mets is expected to pursue him this off-season for understandable reasons, and Ohtani has previously made it clear that he's not necessarily thrilled with the way this season has gone for the Angels, who are set to miss the playoffs completely.

Ohtani has yet to formalize any sort of deal with another team, but the question seems to be more about where he'll end up than whether he'll stay with the Angels. The team did choose to hold onto him past the trade deadline, a move they say they don't regret, so it's still possible that the two sides find some way to come to an agreement. In all likelihood, though, Ohtani's time with the Angels is done, and he'll be in a new uniform when the next season starts.

Read more
She shed? Yoga studio? Man cave? For $11k, this incredibly nice Costco shed can be whatever you want – with a catch
Buy it by October 1 if you're interested
A person doing yoga outside of a she shed.

All adults want their own private space. She shed, man cave, reading nook, yoga studio, scream hut — whatever you want your personal bubble for, Costco wants to grant your wish. As if a Costco membership didn't already open doors to magical worlds, they offer a deal to take if you want a personal sanctuary in your backyard. If this sounds too good to be true, there are a few things to know before you run to your local Costco, but see if this fantastic offer could make your shed life goals happen for you.

What you want to know about the Gorilla Escape 12x10 Shed
Let's dive into the good stuff you care about.
The shed details

Read more