BlockFi, a cryptocurrency lender, filed for bankruptcy protection under Chapter 11 on Monday, becoming the latest victim of the implosion of the crypto exchange FTX. BlockFi, located in New Jersey, struggled for most of the year before receiving a lifeline this season in the form of an FTX credit line. However, even after the acquisition, BlockFi struggled to make ends meet https://www.usnews.com/news/technology/articles/2022-11-28/blockfi-files-for-chapter-11-bankruptcy-protection.
After only a few months of being under FTX management, Blockfi had no choice but to file for bankruptcy protection after the exchange sought bankruptcy protection in its native Japan. Following the filing, a judge appointed FTX’s former CFO, George Frost as the crypto lender’s chief restructuring officer (CRO), who will manage the company’s operations until it is sold or liquidated completely.
According to the official press release concerning this matter issued by BlockFi, the company was launched in 2017 and raised a total of $52 million from investors, which include ConsenSys Ventures, Galaxy Digital, SoFi, and others.
The funds raised at the time allowed BlockFi to expand its cryptocurrency portfolio by purchasing over $10 million in crypto assets on behalf of its customers who used the platform to purchase Bitcoin, Ethereum, Litecoin, and other high-performing cryptocurrencies using credit cards. Earlier this year, in December, BlockFi partnered with the Stellar Foundation to issue over $125 million worth of Stellar Lumens (XLM) that were used to repay customer credit lines — The company owed around $30 million in crypto at press time.
Crypto Credit Lines May Be the Future of Cryptocurrency Financing. Following BlockFi’s bankruptcy filing, several crypto veterans, including Mike Novogratz — the CEO of Galaxy Digital- strongly urged Americans to stop borrowing money to purchase cryptocurrencies since they have no future.
BlockFi is not the first crypto lender to file for bankruptcy protection, as some other companies have been forced to shut down their operations due to the bearish market and a lack of interest from investors. A few months ago, another company called BTCPOP announced that it had to shut down its doors because it couldn’t meet its obligations after imploding under $2 million worth of stolen funds — The company also offered credit lines in exchange for cryptocurrencies.
Dil Bole Oberoi
