Good news for BlockFi customers. The crypto loan servicer has announced that it has plans to remain open. As predicted in an earlier CryptoCoinOpps report, the bankruptcy is just means of protection. After taking the $650M blow from Sam Bankman-Fried’s failed loans, the company plans to rebuild as they wait for a settlement on FTX & ETF.
BlockFi Sold Its Cryptocurrency Reserves
Before the Chapter 11 bankruptcy was filed, BlockFi Inc sold $239-million of its own cryptocurrency holdings. The DeFi lender also warned 250 of their 370 workers, they could be laid off shortly.
Both moves were done in what appears to be a masterful strategy. The company leaders likely wanted to stop some of the company’s bleeding. The laying off of 250 employees could likely retain up to, if not more than $11.25-Million annually for the company. This can be used to satisfy debts with customers.
In new reports, BlockFi has said they plan to take out no loans going forward. And they do not plan to sell the company. Instead, they are prepared to fight to gain control of the collateral assets Sam Bankman-Fried used to take out credit lines that are estimated to be $650,000,000 (USD).
A Win Against SBF
If successful in gaining control of the assets Bankman-Fried used to get his credit lines, BlockFi will end up with a surplus of cash.
For now however, the company is going through with the Chapter 11 Bankruptcy procedures. This will be followed by company restructuring and what appears economizing the offices, to minimize their future down time.
Currently, BlockFi customers are unable to use any services. Withdrawals continue to be paused, loans and credit lines are no longer accessible.
This all comes less than 1 year after BlockFi agreed to pay the SEC $100-million in penalties, for failure to comply with the Investment Company Act of 1940. The crypto-lender had to cease and desist promoting certain offers they failed to register.