Crypto lender BlockFi files for bankruptcy in wake of FTX fold

Yahoo Finance Live anchors report news that BlockFi has filed for Chapter 11 bankruptcy in New Jersey as the FTX collapse continues to ripple throughout the crypto space.

Video Transcript


- Speaking of keeping it interesting. Unfortunately, BlockFi, the latest domino to fall as a result of the collapse of FTX, the crypto lender is now filing for bankruptcy in New Jersey. BlockFi, remember, had halted withdrawals November 11. That's the same day that FTX filed for bankruptcy, and now will join its fellow platform as it files for Chapter 11 in New Jersey.

And in a statement here today, the company is talking about its restructuring efforts. It talks about that it has $256.9 million in cash on hand, which the statement says is expected to provide sufficient liquidity to support certain operations during the restructuring process.

There's some other reporting that a number of folks are being laid off from BlockFi as a result of this, but the question that I don't see answered in here is whether people are going to get their money back. BlockFi is going to try to recover its fund from FTX, but then do its clients receive money back from BlockFi? It's not clear to me from this statement whether they will or not.

- Yeah, FTX had provided BlockFi with $400 million in this revolving credit facility. That was back in July of 2022. And then, additionally, they had the option to buy the lender for up to about $240 million here. Now, of course, the downfall for FTX that we've seen also has brought to light the 50 top creditors that it owes a sum of about $3 billion as well.

- Yeah. Our friend, Dan Roberts, over at Decrypt where he's the Editor-in-Chief, they are actually the ones that broke this story moments ago before it was confirmed with the press release. Dan, I'm following him on Twitter. To your point on layoffs, Julie, saying the BlockFi employees have begun receiving emails with their severance packages. So another tough situation as well over there.