The American cryptocurrency lending specialist BlockFi announced on Monday (November 28th) that it had filed for bankruptcy protection in the United States, attributing its difficulties to the collapse of the virtual currency trading platform. FTX who had come to his rescue this summer.
BlockFi had found itself in turmoil in the first half of the year after the widespread fall in the value of cryptocurrencies, which stumbled several companies in the sector. Some of the customers who deposited money with the company, which was founded in 2017, in return for the promise of high interest payments, then spooked and withdrew their funds. The platform was also affected by the liquidation of the Singaporean investment company Three Arrows Capital, to which it had lent money.
To help it overcome these turmoil, FTX had offered its assistance, in particular offering to grant a line of credit of 400 million dollars. But FTX has since filed for bankruptcy on November 11. BlockFi immediately had to suspend most of its activities, including withdrawals.
“Since this hiatus, our team has explored all strategic options and alternatives available to us,” a post on BlockFi’s site states. Filing for bankruptcy, in the state of New Jersey, will allow the company “to stabilize the business” and give it “the opportunity to implement a reorganization plan that maximizes value for all customers and other stakeholders.” , is added.
The company plans to focus on collecting money owed by other companies. She says she has “more than 100,000 creditors”. It also says it has $257 million in cash at its disposal, which should allow it to finance its operations during the restructuring.
The bankruptcy of FTX caused a domino effect affecting several other companies in the cryptocurrency sector. The French company Coinhouse, which offers savings in cryptocurrencies, thus blocked withdrawals from its passbooks in mid-November, explaining that certain partner sites to which it had lent funds had themselves blocked the outflow of money.