Bankrupt crypto lender BlockFi has decided to liquidate its crypto lending platform, saying the sale would not create enough value for creditors.
The company owes more than $1.3 billion to its top 50 creditors, Chapter 11 Reorganization Plan The plan will be sent to creditors, who will vote on it.
The New Jersey-based company said it concluded that the sale may not create meaningful value for creditors and decided to liquidate. The company said it had been in talks with potential buyers since January and cited recent regulatory concerns as one of the reasons it didn’t get a good offer.
Earlier this month, the company obtained permission to return $297 million to certain customers as part of bankruptcy proceedings.
BlockFi Could Earn More Than $1 Billion In Lawsuit Against Another Bankrupt Company
However, the bankrupt lender noted that the amount creditors receive will largely depend on the outcome of pending lawsuits against Alameda Research, FTX, Three Arrows Capital and crypto mining firm Core Scientific. .
The financier said a successful lawsuit against all these counterparties could result in a “more than $1 billion difference” for customers. Interestingly, all of these companies have filed for bankruptcy.
The company said it expected collections from various accounts to be about $1.6 billion, but noted that actual collections could differ significantly from projections.
The most important factor will be whether Sam Bankman-Fried’s claims against the bankrupt cryptocurrency firms FTX and Alameda will succeed. BlockFi has a $671 million outstanding loan in cryptocurrencies to Alameda Research and an additional $355 million in equity on the FTX exchange.
A court has already ordered BlockFi to return approximately $300 million, citing that the users of the custodial wallet belonged to the customer and not to the bankruptcy estate. Hearing of the plan It was set for June 20th.
BlockFi, a liquidating post-bankruptcy lending platform, first appeared on CryptoSlate.
