BlockFi filed a bankruptcy petition with a U.S. court to permit select clients to withdraw cryptocurrency from their secured BlockFi wallets. The corporation claimed that BlockFi International Ltd, the company's non-U.S. counterpart, had submitted a comparable plea to the Supreme Court of Bermuda.
On Nov. 10, BlockFi put a freeze on customer withdrawals, and two weeks later it and eight other affiliates filed for Chapter 11 bankruptcy protection. BlockFi claimed it has assets between $1 billion and $10 billion, liabilities in the same range, and more than 100,000 creditors in its initial bankruptcy case.
The business claimed that "substantial exposure" to Sam Bankman-bitcoin Fried's exchange FTX, which sought bankruptcy protection on November 11, was the cause of its problems. When FTX failed, it imprisoned the money of a million or more debtors.
In June, after a market downturn brought on by the US$40 billion Terra-Luna stablecoin collapse, Bankman-Fried and FTX decided to lend a hand to BlockFi by providing a US$250 million revolving credit line. According to the business, consumers who have money trapped in BlockFi's cryptocurrency interest-bearing accounts will not have their assets unfrozen since those accounts would stay halted.
BlockFi launched a lawsuit against Emergent Fidelity Technologies, a holding company owned by Bankman-Fried, on the day it declared bankruptcy. BlockFi is attempting to obtain the assets that Emergent Fidelity Technologies allegedly guaranteed to the exchange in November as security for a loan. The resources might conceivably help BlockFi achieve its objective of paying back customers' money.
The bankruptcy court will rule on BlockFi's Tuesday motion to return assets to its customers on January 9; a related hearing for its foreign business will take place on January 13.
