Crypto finance firm BlockFi has filed for bankruptcy to help "stabilise its business," as investors are yet to recover from the fall of crypto exchange FTX. BlockFi and eight of its affiliates has filed for Chapter 11 bankruptcy Code in the US Bankruptcy Court for the District of New Jersey to provide the company with the "opportunity to consummate a comprehensive restructuring transaction that maximises value for all clients and other stakeholders".
"With the collapse of FTX, the BlockFi management team and board of directors immediately took action to protect clients and the Company," said Mark Renzi of Berkeley Research Group, the Company's financial advisor.
"From inception, BlockFi has worked to positively shape the cryptocurrency industry and advance the sector. BlockFi looks forward to a transparent process that achieves the best outcome for all clients and other stakeholders," Renzi said in a statement.
The company said that platform activity continues to be paused at this time. BlockFi has $256.9 million in cash on hand, which, it said, is expected to provide sufficient liquidity to support certain operations during the restructuring process.
According to a report from Decrypt, the company is also planning to lay off "a large portion" of its workers. Earlier this month, FTX filed for bankruptcy due to "an extreme amount of coordinated pressure", which its CEO Sam Bankman-Fried said he agreed to "reluctantly."
Bankman-Fried "froze up in the face of pressure" as his company collapsed, bringing its collateral down to $8 billion from $60 billion. The beleaguered crypto exchange had secured $420 million in October 2021.
BlockFi said that as part of its restructuring efforts, the company will focus on recovering all obligations owed to BlockFi by its counter-parties, including FTX and associated corporate entities. "Due to the recent collapse of FTX and its ensuing bankruptcy process, which remains ongoing, the company expects that recoveries from FTX will be delayed," it said.