BlockFi Forced to Shut Down Lending Platform After Failed Sales Efforts

Crypto lender Blockfi has requested court authorization to sell its lending business in a bid to generate funds to repay creditors after futile attempts to sell the platform to a third party. BlockFi filed a Chapter 11 restructuring plan with the U.S. Bankruptcy Court in Trenton, New Jersey, stating that it did not receive value-maximizing offers from potential buyers. While the firm intends to solicit votes from creditors and retail customers, the plan is still subject to approval by the court. BlockFi blamed regulatory developments for not receiving quality bids and has decided to self-liquidate the lending business. Assets will be distributed to creditors in accordance with the terms of the plan, followed by a wind-down of their affairs. In another development, BlockFi revealed that the primary driver of recoveries for creditors and clients is the claims against its commercial counterparties, which collectively owe BlockFi roughly $1 billion. These entities include bankrupt crypto exchange FTX, its sister trading firm Alameda Research, embattled crypto hedge fund Three Arrows Capital (3AC), Sam Bankman-Fried’s holding firm Emergent, and commodities broker Marex. The claims against FTX Group are expected to increase client recoveries. Users’ assets in BlockFi’s interest-bearing accounts were recently ruled not belonging to them in a U.S. court. BlockFi has been ordered to cancel all pending transactions caused by users in an attempt to move the assets after the company halted withdrawals last year.

J-S Tremblay
About the author - J-S Tremblay

I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...

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