Nov. 28 (UPI) — The cryptocurrency firm BlockFi has filed for Chapter 11 bankruptcy protection as the fallout from the implosion of FTX continues.
BlockFi said in a statement that the filing was made in the U.S. Bankruptcy Court for the District of New Jersey, adding that activity on its platform remains paused.
“We apologize that communication with our clients has not been as frequent as you have come to expect from us,” the company said in a statement to its users on its website.
“We look forward to transparency through our reorganization, and will work to keep clients and stakeholders informed as we make progress.”
In court documents obtained by UPI, BlockFi declared that the company has more than 100,000 creditors with liabilities between $1 billion and $10 billion.
The company said in the court documents that its liabilities include a $275 million loan to FTX as well as a $30 million settlement with the U.S. Securities and Exchange Commission.”
BlockFi has $256.9 million in cash on hand, which is expected to provide sufficient liquidity to support certain operations during the restructuring process,” the company said in its statement.
BlockFi has retained the law firm Haynes and Boone for $750,000, as well as the law firms Kirkland & Ellis LLP and Cole Schotz P.C., the court documents show.
“With the collapse of FTX, the BlockFi management team and board of directors immediately took action to protect clients and the Company,” Mark Renzi of Berkeley Research Group, the company’s financial adviser, said in a statement.
“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.”
The company added that BlockFi International, a subsidiary incorporated in Bermuda, has filed a petition with the country’s Supreme Court for the appointment of joint provisional liquidators in parallel with the Chapter 11 cases in the United States.
John J. Ray III, the new CEO of FTX, said in the court documents earlier this month that it was the worst case of corporate failure he had ever seen. The company, which filed for bankruptcy on Nov. 11, was founded by one-time crypto mogul Sam Bankman-Fried.
Prior to the filing, Bankman-Fried was seeking a buyout from competitor Binance which pulled out after discovering “mishandled customer funds and alleged US agency investigations.”
“I have instructed the team at the FTX Debtors to prioritize the preservation of franchise value as best we can in these difficult circumstances,” said Ray, who was the CEO of Enron that oversaw the liquidation of the company.
“I respectfully ask all of our employees, vendors, customers, regulators and government stakeholders to be patient with us as we put in place the arrangements that corporate governance failures at FTX prevented us from putting in place prior to filing our chapter 11 cases.”
