- Natalia Sherman
- BBC Business Correspondent in New York
The dramatic collapse of cryptocurrency company FTX in early November continues to resonate in the virtual currency industry.
Another of the crypto companies, Block Fi, It declared bankruptcy in the US on Monday.
The company had already stopped most activity on its platform, citing «significant exposure» to FTX.
BlockFi said it is seeking court protection to restructure, pay off debts and get money back for investors.
the company took FTX recovery when cryptocurrency values plummeted earlier this year.
But FTX, a digital currency trading platform, had its own problems this month as people rushed to withdraw money from the site amid doubts about their finances.
The so-called «king of cryptocurrencies» Sam Bankman-Fried, founder and CEO of FTX, resigned and the firm filed for bankruptcy.
The crash shook confidence in the crypto industry and prompted an investigation by the regulators.
BlockFi, which offers loans and other financial services backed by borrowers’ crypto assets, described the collapse of FTX as follows: «shocking».
In the court filing, New Jersey-based BlockFi said i owe himand Money to over 100,000 creditors.
It listed FTX as its second largest creditor. 275 million US dollars owed on an extended loan earlier this year.
You should also US$30 million to the US financial regulator.The Securities and Exchange Commission found earlier this year that the company had not properly registered its products and misled the public about the risk levels in its loan portfolio and lending activity.
BlockFi said filing for Chapter 11 bankruptcy would allow the company to develop «a reorganization plan that maximizes value for all stakeholders, including our valued customers.»
The company reported that it has approximately $257 million in cash on hand.
“From its inception, BlockFi has worked to positively shape and move the cryptocurrency industry forward,” said Mark Renzi of Berkeley Research Group, the company’s financial advisor.
“BlockFi expects a transparent process that works best for all customers and other stakeholders,” he added.
Founded in 2017, BlockFi introduced itself as: A bridge between cryptocurrencies and traditional financial products.
In recent years, it has added hundreds of millions of major investors to the tech industry, including Bain Capital Ventures and Tiger Global.
He said he managed more than $15 billion in assets last year when cryptocurrency values soared.
BlockFi isn’t the only company affected by the drop in cryptocurrency prices earlier this year.
The value of bitcoin, the best-known digital currency, fell from over $64,000 a year ago to just under $20,000 in June.
Celsius Network and Voyager Digital are among other companies filing for bankruptcy.
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