{"id":1754651,"date":"2022-11-29T06:11:24","date_gmt":"2022-11-29T11:11:24","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1754651"},"modified":"2022-11-29T09:52:10","modified_gmt":"2022-11-29T14:52:10","slug":"blockfi-files-for-chapter-11-bankruptcy-protection-as-ftx-contagion-spreads","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/blockfi-files-for-chapter-11-bankruptcy-protection-as-ftx-contagion-spreads\/","title":{"rendered":"BlockFi Files for Chapter 11 Bankruptcy Protection as FTX Contagion Spreads"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">22<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fblockfi-files-for-chapter-11-bankruptcy-protection-as-ftx-contagion-spreads%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1754651&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>BlockFi, one of the largest <a href=\"https:\/\/www.theepochtimes.com\/t-cryptocurrency\">cryptocurrency<\/a> lenders in the industry, filed for Chapter 11 bankruptcy protection, according to a\u00a0<a href=\"https:\/\/www.businesswire.com\/news\/home\/20221128005451\/en\/BlockFi-Commences-Restructuring-Proceeding-to-Stabilize-Business-and-Maximize-Value-for-all-Clients-and-Stakeholders\">statement<\/a>\u00a0on Nov. 28.<\/p>\n<p>The company acknowledged that it had \u201csignificant exposure\u201d to <a href=\"https:\/\/www.theepochtimes.com\/t-ftx\">FTX<\/a> and founder and former CEO Sam Bankman-Fried\u2019s subsidiaries. This, BlockFi says, included \u201cobligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX.US.\u201d<\/p>\n<p>The New Jersey-based crypto firm, founded in 2017 by Zac Prince and Flori Marquez, has liabilities of $1 billion to $10 billion and more than 100,000 creditors. BlockFi owes $729 million to its largest creditor, Ankura Trust, a business that manages creditors in stressed situations. FTX, its second-largest creditor, is owed $275 million on a loan approved earlier this year. BlockFi also listed the Securities and Exchange Commission (SEC) as a creditor that is owed $30 million.<\/p>\n<p>In February, a BlockFi subsidiary agreed to pay $100 million to the SEC and 32 states to settle charges relating to a retail crypto lending product that the company provided to roughly 600,000 clients.<\/p>\n<figure id=\"attachment_4870130\" class=\"wp-caption alignnone\"><a href=\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2022\/11\/17\/screen.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"lazy size-medium wp-image-4870130\" src=\"https:\/\/www.theepochtimes.com\/assets\/themes\/eet\/images\/white.png\" data-src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/11\/screen-600x400-1.jpg\" alt=\"Epoch Times Photo\" width=\"600\" height=\"400\" \/><figcaption class=\"wp-caption-text\"><noscript><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-4870130\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/11\/screen-600x400-1.jpg\" alt=\"Epoch Times Photo\" width=\"600\" height=\"400\" \/><\/noscript><\/figcaption><\/a> The FTX logo is seen on a computer monitor in Atlanta on Nov. 10, 2022.\u00a0 (Photo Illustration by Michael M. Santiago\/Getty Images)<\/figure>\n<p>BlockFi currently has $256.9 million in cash on hand, providing the entity with enough liquidity to maintain operations throughout the process. The company noted in its filing that bankruptcy protection would allow BlockFi to effectively stabilize the organization and restructure operations, including recovering all obligations owed by its counterparties, like bankrupt crypto exchange FTX. However, BlockFi noted that it anticipates that recoveries from FTX will be delayed.<\/p>\n<p>The business will now work to reduce expenses, including labor costs.<\/p>\n<p>Platform activity has been suspended. The website had previously stopped withdrawals.<\/p>\n<p>\u201cWith the collapse of FTX, the BlockFi management team and board of directors immediately took action to protect clients and the company,\u201d said Mark Renzi of Berkeley Research Group, the company\u2019s financial adviser, in a <a href=\"https:\/\/blockfi.com\/November28-OfficialAnnouncement\">statement<\/a>. \u201cFrom inception, BlockFi has worked to positively shape the cryptocurrency industry and advance the sector. BlockFi looks forward to a transparent process that achieves the best outcome for all clients and other stakeholders.\u201d<\/p>\n<p>BlockFi, which received financial backing in its early days from major Wall Street investors Peter Thiel and Mike Novogratz, hired Kirkland &#038; Ellis and Haynes &#038; Boone as bankruptcy counsel and Berkeley Research Group as a financial adviser.<\/p>\n<p>So far this year, several crypto businesses have filed for bankruptcy, including crypto lenders Celsius and Voyager Digital.<\/p>\n<h2>The FTX Contagion Effect<\/h2>\n<p>Following the collapse of Bankman-Fried\u2019s crypto empire, there has been a contagion effect in the cryptocurrency sector. FTX, Alameda Research, and other affiliates filed for bankruptcy protection on Nov. 11.<\/p>\n<p>There\u2019s widespread concern that digital asset brokerage Genesis Global Trading might be the next to fall as the platform attempts to raise fresh funds for its lending unit, Fortune <a href=\"https:\/\/fortune.com\/2022\/11\/22\/crypto-brokerage-genesis-said-warning-investors-may-declare-bankruptcy-raise-1-billion\/\">reported<\/a>. Genesis is looking for $1 billion in new capital. The reports followed soon after the firm paused new loan originations and redemptions after revealing that it had $175 million locked in an FTX trading account.<\/p>\n<p>\u201cWe recognize how challenging this past week has been due to the impact of the FTX news. At Genesis, we are entirely focused on doing everything we can to serve our clients and navigate this difficult market environment,\u201d Genesis stated in a\u00a0<a href=\"https:\/\/twitter.com\/GenesisTrading\/status\/1592867198900768769\">tweet<\/a>. \u201cOur #1 priority is to serve our clients and preserve their assets.\u201d<\/p>\n<p>Others might not be on the cusp of insolvency, but they\u2019re imposing restrictions. The Gemini exchange, owned by the Winklevoss brothers, announced that it was halting withdrawals on its interest-bearing Earn accounts because of Genesis\u2019s revisions.<\/p>\n<p>\u201cWe are working with the Genesis team to help customers redeem their funds from the Earn program as quickly as possible. We will provide more information in the coming days,\u201d Gemini said in a <a href=\"https:\/\/www.gemini.com\/blog\/an-important-message-regarding-gemini-earn\">statement<\/a>.<\/p>\n<p>Overall, the sentiment remains bleak, with crypto venture firm Multicoin Capital warning investors in a Nov. 17 <a href=\"https:\/\/www.cnbc.com\/2022\/11\/17\/crypto-firm-multicoin-says-contagion-fallout-from-ftx-will-continue.html\">letter<\/a> obtained by CNBC that \u201cmany trading firms will be wiped out and shut down\u201d in the coming weeks, citing the FTX debacle.<\/p>\n<p>\u201cWe put entirely too much trust in our relationship with FTX. We had too many assets on FTX,\u201d managing partners Kyle Samani and Tushar Jain wrote. \u201cWe expect to see contagion fallout from FTX\/Alameda over the next few weeks. Many trading firms will be wiped out and shut down, which will put pressure on liquidity and volume throughout the crypto ecosystem. We have seen several announcements already on this front, but expect to see more.\u201d<\/p>\n<p>Crypto prices have also been hammered this month, adding to their woes. Over the past month, Bitcoin and Ethereum, for example, have slumped 22 percent and 28 percent, respectively, to $16,191 and $1,172. The global crypto market cap has crashed to $820 billion, down from its November 2021 peak of about $2.5 trillion.<\/p>\n<div class=\"author_wrapper\">\n<div class=\"one_author_block round\">\n<div class=\"top_row\">\n\t\t\t\t\t<a href=\"https:\/\/www.theepochtimes.com\/author-andrew-moran\"><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/10\/WEB_AndrewMoran.jpeg\" alt=\"Andrew Moran\" \/><\/a><\/p>\n<p>Follow<\/p>\n<\/div>\n<p>Andrew Moran has been writing about business, economics, and finance for more than a decade. He is the author of &#8220;The War on Cash.&#8221;<\/p>\n<\/p><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>BlockFi, one of the largest cryptocurrency lenders in the industry, filed for Chapter 11 bankruptcy protection, according to a\u00a0statement\u00a0on Nov. 28.The company acknowledged that it had \u201csignificant exposure\u201d to FTX<\/p>\n","protected":false},"author":1,"featured_media":1754654,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[547],"tags":[],"class_list":["post-1754651","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-bongino-report"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1754651","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1754651"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1754651\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1754654"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1754651"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1754651"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1754651"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}