BlockFi to disclose assets, liabilities and insider payments

abdelaziz Fathi

As beleaguered cryptocurrency lender BlockFi continues its Chapter 11 proceedings, the company will disclose information on its assets and liabilities on January 11, 2023.

BlockFi

The filings will contain information on certain payments made to insiders and other parties prior to the bankruptcy filing in November. The Jersey City-based firm also filed a presentation that provides all stakeholders with key metrics and context about the bankruptcy proceedings.

Similar to many clients, BlockFi claims that its management team deployed their personal assets on the platform, to trade, earn interest, and store different cryptocurrencies under the same terms of service. For context, in 2022, BlockFi completed a total of $7.7 billion in retail withdrawals, and the management team’s withdrawals represent 0.15% of that total volume.

“BlockFi looks forward to continuing its open dialogue with the UCC, U.S. Trustee, and all stakeholders in its chapter 11 cases. More information related to the Claims Process and the filing of Proof of Claims will be sent to clients at the appropriate time. Please note that, at this time, no deadlines have been set,” the statement reads.

The privately held firm, founded in 2017 by Zac Prince and Flori Marquez, filed for Chapter 11 bankruptcy protection nearly two weeks after halting withdrawals of customer deposits due to significant exposure to bankrupt exchange FTX.

Approximately eight additional affiliated companies are part of the proceedings, including its Bermuda subsidiary. In the 23-page bankruptcy filing, BlockFi indicates it has more than 100,000 creditors, with liabilities in the range of $1 billion to $10 billion. The company has $257 million in cash on hand, which it says will provide sufficient liquidity to support operations during the restructuring process.

BlockFi listed an outstanding $275 million loan to FTX.US and called the American arm of FTX’s now-bankrupt exchange as its second-largest creditor. This was due to FTX’s bailout of BlockFi in July 2022, which involved FTX providing the lender with a $400 million credit facility and the option to buy the company for up to $240 million.

The New Jersey-based company said the liquidity crunch was due to its exposure to FTX via loans to SBF’s trading arm, Alameda Research, as well as assets held on the platform that became trapped there.

Following FTX’s fallout, BlockFi paused withdrawals and limited activity on its platform earlier this month saying it couldn’t operate as usual. The firm was also facing potential losses of up to $80 million due to exposure to crypto miner Core Scientific, which raised the possibility of its bankruptcy.

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