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Crypto lender BlockFi files for bankruptcy in New Jersey

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Representations of cryptocurrencies plunge into water in this illustration taken, May 23, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

U.S. cryptocurrency lender BlockFi said on Monday it had filed for Chapter 11 bankruptcy protection along with eight affiliates in a New Jersey court, the latest casualty since FTX’s collapse earlier this month triggered instability in the crypto market.

In a court filing, New Jersey-based BlockFi said it owes money to more than 100,000 creditors. It listed crypto exchange FTX as its second-largest creditor, with $275 million owed on a loan extended earlier this year.

The company’s largest creditor is Ankura Trust, a company that represents creditors in stressed situations, and is owed $729 million.

BlockFi had earlier paused withdrawals from its platform and acknowledged it had “significant exposure” to FTX and its associated entities.

The move comes weeks after FTX filed for U.S. bankruptcy protection and its founder Sam Bankman-Fried resigned as chief executive.

In July, FTX had signed a deal with BlockFi to provide the firm with a $400 million revolving credit facility and an option to buy it for up to $240 million after the crypto lender was hit by a collapse in prices earlier in the year.

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