After Failing To Close Sales, BlockFi Will Close Its Lending Platform
Last year, the once-well-known crypto lender filed for bankruptcy.
Blockfi, a bankrupt crypto lender, has asked a court to let it sell its loan business so that it can get money to pay back its creditors.
After failing to sell the site to a third party, the move was made. BlockFi said that it did not get offers from potential buyers that maximized its worth.
BlockFi to Liquidate Lending Business
In a document filed with the U.S. Bankruptcy Court in Trenton, New Jersey, on Friday, the failing lender told the court about the Chapter 11 plan. Even though the company plans to ask creditors and retail customers to vote on the plan, the court still has to agree to it.
BlockFi filed for bankruptcy in November and said that changes in regulations were one reason why it didn’t get good offers from potential buyers.
“Therefore, finalizing and consummating a transaction for the BlockFi Platform would not result in an expedient and value-maximizing transaction for the benefit of the Debtors’ creditors.
Accordingly, the Debtors are proceeding with the Self-Liquidation Transaction whereby the Debtors will distribute their assets to creditors in accordance with the terms of the Plan, followed by a Wind Down of their affairs,” lawyers representing the bankrupt entity said.
Increase Client Recoveries with FTX Group Claims
Also, BlockFi has said that claims against its business counterparties are the main way that creditors and clients get their money back. The businesses include the bankrupt cryptocurrency exchange FTX, its sister trading firm Alameda Research, the troubled cryptocurrency hedge fund Three Arrows Capital (3AC), Sam Bankman-Fried’s holding company Emergent, and commodities broker Marex.
Last year, when BlockFi was having trouble getting money because of the bear market, FTX gave it a $250 million revolving credit line. BlockFi is owed about $1 billion by FTX, Alameda, 3AC, Emergent, and Marex.
“And as described in the Liquidation Analysis… client recoveries will be increased or decreased massively (with total swings in client recoveries potentially exceeding $1 billion) depending on whether BlockFi can succeed in these litigations, so we believe they are worth taking the time to pursue,” the lender said.
A U.S. judge recently decided that users do not own the assets in BlockFi’s interest-bearing accounts, even though they are trying to get them back. After the company stopped withdrawals last year, the crypto lender has been told to cancel all pending deals that users made to try to move their assets.
