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BlockFi Files for Bankruptcy

Cryptocurrency lender BlockFi, last valued at $4.8B, filed for Chapter 11 bankruptcy yesterday, following this month's collapse of cryptocurrency exchange FTX and its sister firm Alameda Research. BlockFi has more than 100,000 creditors, with the largest 10 creditors alone owed nearly $1.2B, including $30M owed to the US Securities and Exchange Commission, according to filings.

BlockFi's bankruptcy filing attributes its fall to intertwined finances with FTX and bankrupt cryptocurrency hedge fund Three Arrows Capital, previously one of BlockFi's largest borrowers. The New Jersey-based lender has an outstanding $275M loan to FTX US, while Alameda has defaulted on $680M of collateralized loan obligations. Meanwhile, Three Arrows Capital's July bankruptcy has led to about $80M in losses for BlockFi.

BlockFi, founded in 2017, is the latest digital asset firm to declare bankruptcy. Its competitors, Celsius Network and Voyager Digital, also went bankrupt in July, citing volatile market conditions that resulted in losses. See how cryptocurrency lending works here.

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