Aaryamann Shrivastava
FXStreet
- BlockFi filings will disclose all the payments it has made to insiders and other parties prior to the bankruptcy filing.
- BlockFi management also confirmed that no member of its team had withdrawn any cryptocurrency from its lending platform since October.
- FTX collapse-induced contagion has been hailed as the reason behind BlockFi’s bankruptcy following its $250 million credit line to the exchange.
BlockFi was one of the many crypto companies that fell victim to the FTX downfall that led to the crypto market facing its second contagion in 2022. BlockFi was also a victim of the Three Arrows Capital bankruptcy, which led to the eventual bankruptcy of the company. The company will navigate through this difficult situation this year.
BlockFi bankruptcy proceedings to begin
BlockFi, in an announcement on Monday, confirmed that it would be filing its assets and liabilities for bankruptcy to the court on January 11.
Through the filings, the company is set to disclose information about BlockFi’s financial records. This will include payments made by the crypto lender to insiders and other parties prior to its bankruptcy filing.
Tweeting about the same, BlockFi stated,
“BlockFi is committed to maximizing value for all clients and other stakeholders by moving forward in its chapter 11 cases expeditiously and transparently…BlockFi looks forward to continuing its open dialogue with the UCC, U.S. Trustee, and all stakeholders in its chapter 11 cases.”
Following the collapse of cryptocurrency exchange FTX, BlockFi attempted to claim the $450 million Robinhood shares tied to Sam Bankman-Fried and Gary Wang. However, BlockFi failed to convince the court to prioritize itself as a creditor, and the Department of Justice (DoJ) ended up seizing the assets on Monday.
FTX founder Sam Bankman-Fried in peril
FTX co-founders Sam Bankman-Fried and Gary Wang lost their claim to the 55 million Robinhood Shares tied to FTX and Alameda Research on Monday. Bankman-Fried’s lawyers argued that the shares were not a part of the bankruptcy estate because they were owned by Emergent Fidelity Technologies.
However, the DoJ refuted these claims, seizing the assets, citing charges against Sam Bankman-Fried. These charges led to the $450 million worth of Robinhood shares becoming a part of money laundering and wire fraud violation.
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