The collapse of FTX has felled another crypto business, with centralized lender BlockFi filing for Chapter 11 bankruptcy on Monday.
The move comes two weeks after BlockFi suspended withdrawals due to “the lack of clarity on the status of FTX.com, FTX US, and Alameda.”
FTX’s U.S. arm signed an option to purchase BlockFi in July. But the acquisition had yet to be completed when the lender suspended withdrawals on Nov. 10, per BlockFi’s co-founder and COO, Flori Marquez. The next day, FTX filed for Chapter 11 bankruptcy.
BlockFi will try to recover the money it is owed by FTX, the company said in a news release Monday.
“Due to the recent collapse of FTX and its ensuing bankruptcy process, which remains ongoing, the Company expects that recoveries from FTX will be delayed,” BlockFi said.
Meanwhile, it will ask the court for permission to keep paying employees so that it can continue “business-critical functions during the chapter 11 process.”
According to the release, has US$256.9 million in cash on hand, “which is expected to provide sufficient liquidity to support certain operations during the restructuring process.”
Sam Bankman-Fried, who founded FTX but relinquished his role as CEO the same day it declared bankruptcy, tweeted about BlockFi’s finances in July, when the acquisition was announced.
“BlockFi is financially strong,” he wrote. “All operations are normal, as they always have been, and assets are safe.”
BlockFi raised a Series D round that valued the company above $3B in February 2021, according to Crunchbase.