American cryptocurrency platform BlockFi announced on the commencement of bankruptcy proceedings. Both BlockFi Inc. and all eight of its subsidiaries filed under Chapter 11 bankruptcy protection and business restructuring. In parallel, Bermuda-registered BlockFi International Ltd filed a petition with the country’s supreme court to appoint temporary liquidators for the business pursuant to section 161(e) of the Bermuda Companies Act.
BlockFi provides its customers with loans in dollars secured in cryptocurrencies, and also allows you to open deposits in cryptocurrencies at high interest rates. At the end of 2021, the company had more than 450 thousand private clients, most of which are small investors. Of these, regarding 100 thousand are creditors. The volume of user deposits in cryptocurrency is, according to The Wall Street Journalfrom $14 billion to $20 billion, under which BlockFi issued loans for $7.5 billion.
The bankruptcy of BlockFi is a consequence of the collapse of the cryptocurrency company FTX Group, which was one of the largest players in the market. BlockFi froze account transactions almost immediately following filing for bankruptcy on November 11 announced FTX Group, from which BlockFi borrowed $400 million in June of this year. According to court documents, BlockFi still owes FTX $275 million. The largest debt owed by the crypto lender is to the trust company Ankura ($729 million).
FTX’s problems dragged dozens of other companies along with them. So, serious liquidity problems arose at the Genesis cryptocurrency broker, which is now desperately looking for $1 billion. According to Morgan Stanley, a total of 63 companies may suffer from the collapse of FTX.
Read more regarding the history of the collapse of FTX – in the publication “Kommersant” “Geek Corporation”.