BlockFi plans to liquidate its own lending platform after a failed sale. The Wall Street Journal reports.
The company filed for Chapter 11 bankruptcy in Trenton, New Jersey, under Chapter 11, which provides for reorganization. The plan to reorganize the business will be sent to all creditors for a vote, including more than 100,000 retail customers.
After engaging with potential buyers, the company concluded that selling the platform would not yield sufficient value.
BlockFi said that the amount of restitution to customers largely depends on the outcome of ongoing proceedings against the collapsed crypto exchange FTX and Alameda Research, and the bankrupt hedge fund Three Arrows Capital.
According to the filing, BlockFi owes nearly $1.3 billion to its 50 largest creditors.
On November 11, 2022, BlockFi suspended withdrawals, citing the FTX and Alameda crisis. A few days earlier, the platform’s founder Flori Marquez asserted that all of the company’s products were operational, and the business did not depend on the firms Sam Bankman-Fried.
On November 28, BlockFi and eight subsidiaries filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code.
In May, a court allowed the company to return $300 million to clients whose funds were held in custody accounts. Authorities did not recognise this amount as property of the platform.