More than 36,400 Texans had invested in the cryptocurrency platform based on an earlier enforcement action against the company.
The sudden collapse of crypto exchange FTX Trading has dragged down the price of Bitcoin as well as caused financial problems for other platforms such as BlockFi.BlockFi Inc. has become the latest crypto firm to collapse in the wake of crypto exchange FTX’s rapid downfall.
BlockFi said in a statement that it will use the Chapter 11 bankruptcy process to “focus on recovering all obligations owed to BlockFi by its counterparties, including FTX and associated corporate entities,” adding that recoveries are likely to be delayed by FTX’s own bankruptcy. Chapter 11 bankruptcy allows a company to continue operating while working out a plan to repay creditors.
The petition, filed in New Jersey, lists BlockFi’s assets and liabilities at between $1 billion and $10 billion each. The company said in the statement that it had around $257 million of cash on hand, and is starting an “internal plan to considerably reduce expenses, including labor costs.” Citing “a lack of clarity” over the status of bankrupt FTX and Alameda Research, the Jersey City, N.J.-based company earlier halted withdrawals and said it was exploring “all options” with outside advisers.
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