BlockFi moves to liquidate its crypto lending platform
Bankrupt company says it determined that selling the business might not generate meaningful value for creditors
Fox News senior congressional correspondent Chad Pergram reports from Capitol Hill, where crypto is largely unregulated.
Bankrupt cryptocurrency lender BlockFi plans to liquidate its cryptocurrency lending platform after concluding that selling the business to a new owner wouldn’t generate enough value for its creditors.
Jersey City, N.J.-based BlockFi outlined its chapter 11 plan of reorganization, which will be sent to creditors—including more than 100,000 retail customers—for a vote, in a document filed Friday with U.S. Bankruptcy Court in Trenton, N.J.
BlockFi has determined liquidating its cytocurrency lending platform would generate more value for creditors than a sale. (Reuters/Dado Ruvic/Illustration / Reuters Photos)
The company said that after having engaged with potential buyers to solicit a sale of its digital-assets platform and about 660,000 client accounts since January, it concluded that a sale might not generate meaningful value for creditors. The company cited recent regulatory developments as one reason that it didn’t receive value-maximizing offers from prospective buyers.
FTX FOUNDER SAM BANKMAN-FRIED ASKS COURT TO THROW OUT MOST CHARGES FOLLOWING INDICTMENT
BlockFi said how much clients will recover largely depends on the outcome of pending litigation against its commercial counterparties, including crypto exchange FTX and trading firm Alameda Research, both founded by Sam Bankman-Fried, as well as cryptocurrency hedge fund Three Arrows Capital and crypto miner Core Scientific. The success or failure of these lawsuits "will make a difference in excess of $1 billion to clients," BlockFi said in the filing.
Sam Bankman-Fried leaves the court in New York, on January 03, 2023. The former CEO of FTX and Alameda was released on $250M bail. (Fatih Aktas/Anadolu Agency via Getty Images / Getty Images)
BlockFi owes nearly $1.3 billion to its top 50 creditors, according to its filing.
BITCOIN'S ‘GROWING PAINS’ ARE NOTHING TO WORRY ABOUT LONG-TERM: BROCK PIERCE
A number of crypto companies have filed for bankruptcy since last year, including FTX, Alameda, Three Arrows, Core Scientific, Celsius Network and Voyager Digital. Some have turned to liquidation to distribute assets to customers as they have struggled to find deals to help them emerge from chapter 11.
Changpeng Zhao, founder and chief executive officer of Binance, attends the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris, France June 16, 2022. (REUTERS/Benoit Tessier/File Photo / Reuters Photos)
Last month, the U.S. arm of global crypto exchange Binance terminated an agreement to purchase the user accounts at crypto platform Voyager, citing regulatory concerns. With the deal called off, Voyager this month said in a court filing that it would move ahead with liquidation according to its chapter 11 plan, pending any responses or objections filed by a May 15 deadline.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
With no prospect for a buyer, BlockFi said in a letter to creditors filed in court that it believes its proposed liquidation plan is the fastest way to return the funds in digital-wallet accounts to customers.