BlockFi’s Chapter 11 filing Monday is part of its restructuring plan to “stabilize” its operations, the crypto lender announced. The company is the latest victim of the financial contagion caused by the implosion of Sam Bankman-Fried’s FTX.
BlockFi’s restructuring plan to include layoffs
BlockFi stated in its bankruptcy case that it owes money to over 100,000 creditors.
BlockFi has approximately $257 million in cash on hand, which the business believes will provide adequate liquidity to support it during the restructuring process. According to the statement, the company estimates its assets and liabilities to be between $1 billion and $10 billion.
Layoffs will be part of the restructuring. It was unclear how many staff will be let go, but the company said it had “initiated an internal plan to considerably reduce expenses, including labor costs.”
FTX contagion
As plunging crypto prices threatened to bring down key companies in the digital asset ecosystem, BlockFi secured a $400 million financial lifeline from FTX in July.
FTX began to collapse in early November when investors became concerned about its relationship with Alameda. A rush in withdrawals pushed FTX into a liquidity crisis, causing it to burn out.
Bankruptcy procedures since then have revealed astonishing evidence of business mismanagement — a “complete failure of corporate controls,” according to FTX’s new CEO.