Crypto lender BlockFi has filed for Chapter 11 bankruptcy protection citing a liquidity crisis due to substantial exposure to recently bankrupt crypto exchange FTX.
BlockFi says that it is exposed to FTX via loans to Alameda, a crypto trading firm affiliated with FTX, as well as cryptocurrencies held on FTX’s platform.
The firm listed its assets and liabilities as being between US$1 billion and US$10 billion. The company has US$256.9 million in cash on hand to support certain operations during the restructuring process.
Founded in 2017, BlockFi is described as a blockchain-based wealth management platform for crypto investors. Activity on the platform is currently paused.
The company has raised US$1.4 billion in funding to date according to Crunchbase, including US$400 million in debt financing from FTX in mid-2022 and US$850 million in two funding rounds in 2021.
“With the collapse of FTX, the BlockFi management team and board of directors immediately took action to protect clients and the company.
BlockFi looks forward to a transparent process that achieves the best outcome for all clients and other stakeholders,”
said Mark Renzi of Berkeley Research Group, BlockFi’s financial advisor.
This article first appeared on Fintech News America.