DeFi or Decentralized Finance has been hailed as the future of the world’s monetary systems. Holiday season 2022 however is challenging that ideology. As the 3rd biggest crypto-exchange in the world collapsed just last month, the shock-waves are still being felt. Today, major DeFi lender BlockFi too had to concede to failure, filing Chapter 11 bankruptcy.
Why BlockFi Filed For Bankruptcy
The company left a notice for its 225,000 users on their official website blog with details of the voluntary filing.
In layman’s terms, the reason for the filing are credited to no other than Sam Bankman-Fried of FTX.
BlockFi claims the filing is not the end of their business but instead a ‘chess move’ to help stabilize the lender. After stabilization, the DeFi institution will begin to work on a plan to do the best they can for its client base of 225K.
Bankruptcy Gives Protection
This strategy protects BlockFi from actions against the company. It’s the same move FTX made just weeks ago. A bankruptcy judge filed a ‘stay’ motion in that case to prevent other entities from doing anything against the Bahamas-based crypto-exchange. Other entities like Miami-Date county of Florida have also been affected [read here].
That ‘stay’ motion also protected FTX against BlockFi potentially. The lender cannot sue for the money owed by Sam Bankman-Fried’s now defunct crypto-exchange. At least it can’t be done, without additional measures.
For those affected by the bankruptcy, BlockFi left their claims agent Kroll’s contacts. Website, email, and phone contacts were provided:
- https://restructuring.ra.kroll.com/blockfi
- (888) 773-0375 (Toll Free)
- (646) 440-4371 (International
- email blockfiinfo@ra.kroll.com
More details will be released as this case develops. Sam Bankman-Fried has not yet made a public response nor FTX. However, this should have been expected as the brand knows its debts.
Its expected hundreds of millions of dollars were owed to BlockFi. The Bankruptcy hearing could be a move that helps prioritize the crypto-lender ahead of others, on the final list of who’s to be paid out from what’s left of FTX assets.
