The collapse of FTX had already forced BlockFi to suspend most activity on its platform.
Image source, Getty ImagesThe troubled crypto firm BlockFi has filed for bankruptcy in the US, as the dramatic collapse of FTX continues to reverberate across the industry.
The company had already halted most activity on its platform, citing “significant exposure” to FTX.
BlockFi said it was seeking court protection to restructure, settle its debts and recover money for investors.
BlockFi had received a rescue deal from FTX earlier this year as the values of cryptocurrencies plunged.
But FTX, a crypto exchange, ran into its own problems this month, as people rushed to pull money from the platform amid doubts about its finances.
Former boss Sam Bankman-Fried, the so-called “crypto king”, resigned and the firm declared bankruptcy.
The collapse has shaken faith in the crypto industry and drawn scrutiny from regulators.
BlockFi, which offered loans backed by borrowers’ crypto assets, described the collapse of FTX as “shocking”.
In a court filing, New Jersey-based BlockFi said it owed money to more than 100,000 creditors. It listed crypto exchange FTX as its second-largest creditor, with $275m owed on a loan extended earlier this year.
It said the Chapter 11 bankruptcy filing would allow the firm to develop a “reorganization plan that maximizes value for all stakeholders, including our valued clients”.
The company said it had almost $257m in cash on hand.
“From inception, BlockFi has worked to positively shape the cryptocurrency industry and advance the sector. BlockFi looks forward to a transparent process that achieves the best outcome for all clients and other stakeholders,” said Mark Renzi of Berkeley Research Group, the company’s financial advisor.