WSJ: Blockfi cryptolending platform will submit bankruptcy proceedings
Blockfi cryptolending platform is preparing to apply for insolvency in accordance with Chapter 11 of the US Code of Bankruptcy. About this writes The Wall Street Journal with reference to aware sources.
On November 11, the company said that it would not be able to conduct business in normal mode and limit operations due to a lack of clarity regarding the status of FTX and ALAMEDA Research. Blockfi suspended the withdrawal of funds and recommended that users refrain from making deposits.
On the same day, FTX Group submitted a bankruptcy statement, and Sam Bankman-Frida left the post of CEO.
On November 14, Blockfi denied the information that most of its assets are stored on FTX. At the same time, the company admitted that the platform has a credit line presented by the American division of the exchange, as well as outstanding obligations from Alameda Research.
Blockfi IS Working Around the Clock to Achieve the Best Possible Outcome Given Last Week’s Events.
We Shared this Message with Oour Clents Today: Https: // T.Co/ZWHNFQDZMK
– The Bank of Spain Blockfi (@blockfi) november 14, 2022
“Rumors that most of the BlockFi assets are stored on FTX do not correspond to reality. Nevertheless, we are at serious risk due to FTX and related corporate structures. This includes Alameda’s obligations, assets stored on FTX.com, and an unused credit line from FTX.Us, ”the statement said.
In June 2022, FTX opened BlockFi a renewable credit line of $ 250 million. Subsequently, the American division of the exchange issued another renewable loan of $ 400 million, having received an option to purchase a platform for $ 240 million.
According to WSJ sources, Blockfi used “most of it, if not all means”. They also noted that the company provided Alameda Research “Millions of dollars in the form of loans partially secured by FTT tokens”.
The interlocutors of the publication added that at the end of 2021 the platform held customer deposits for $ 14 billion-20 billion and $ 7.5 billion in the form of outstanding loans.
Recall, on November 8, the founder of Blockfi Flores Marquez said that all products of the company are completely operative, and business does not depend on the Bankman-Frida exchange.
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