Two weeks ago BlockFi denied rumours that a majority of its assets are custodied at collapsed crypto exchange FTX.
With FTX and all of its affiliates now in bankruptcy proceedings, said the company, the “most prudent” move for now is to pause many platform activities.
The company flatly refuted rumours that a majority of it’s assets were held in custody – and therefore tied up for potentially a long time and perhaps even unrecoverable – as false.
BlockFi, however, did acknowledge “significant exposure” in the form of obligations owed to BlockFi by Alameda, assets on the FTX platform, and an undrawn credit line from FTX.
Today, BlockFi filed for Chapter 11 bankruptcy, making it the latest casualty of the fallout from the collapse of FTX exchange.
BlockFi was bailed out this summer by Bankman-Fried after it suffered losses on loans to the collapsed hedge fund Three Arrows Capital.
BlockFi had assets and liabilities of $1 billion to $10 billion, with more than 100,000 creditors, according to bankruptcy filings in New Jersey federal court on Monday.
BlockFi also owes $30 million to the US Securities and Exchange Commission as part of a $100 million settlement agreed with the regulator in February in which the lender was charged for offering interest-bearing accounts without registering them as securities.
The company is the latest once high-flying crypto company to come crashing to earth as the collapse of FTX continues to send shockwaves through the digital assets industry.
“Due to the recent collapse of FTX and its ensuing bankruptcy process, which remains ongoing, the company expects that recoveries from FTX will be delayed,” BlockFi said.
The company was valued at $4 billion in a fundraising round last summer.
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