Crypto lender BlockFi has filed for bankruptcy today as the fallout of FTX’s collapse spreads across the industry.
BlockFi and eight of its affiliate firms said they had filed for Chapter 11 bankruptcy proceedings in New Jersey, which they claimed would “consummate a comprehensive restructuring transaction” and maximise value for its clients and stakeholders.
The collapse makes BlockFi another casualty of the implosion of Sam Bankman-Fried’s crypto exchange FTX, which has sent crypto prices tumbling and sparked fears of contagion across the sector.
BlockFi was rescued by FTX earlier this year as the sector was first gripped by the a downturn. It listed FTX as its second biggest creditor, with $275m still owed on a loan paid out earlier this year.
Bosses at BlockFi said they had rushed to shield their clients from the worst impacts of potential contagion.
“With the collapse of FTX, the BlockFi management team and board of directors immediately took action to protect clients and the Company,” said Mark Renzi of Berkeley Research Group, BlockFi’s financial advisor.
“From inception, BlockFi has worked to positively shape the cryptocurrency industry and advance the sector.”