TL:DR
- BlockFi declared bankruptcy in late November 2022 due to its connection with FTX.
- BlockFi was granted approval by the bankruptcy court to sell its remaining assets.
- Bidders for BlockFi’s crypto mining assets will have until February 20 to submit their proposals.
- BlockFi’s attempts to get its hands on Robinhood stocks have been delayed by parallel legal proceedings in Antigua
Blockfi given the go- ahead
BlockFi, the crypto lender that was once a key player in the crypto market, has been through a roller coaster of events in recent months. The company, which allowed users to earn interest on their deposited cryptocurrencies, declared bankruptcy in late November 2022 due to its connection with FTX, a crypto exchange that had previously extended BlockFi several lines of credit.
Recently, BlockFi was granted approval by the bankruptcy court to sell its remaining assets, which has created a window of opportunity for suitors to make their bids. Bidders for BlockFi’s crypto mining assets will have until February 20 to submit their proposals, with an auction scheduled for the following week. The sale of these assets will be the first in a series of potential auctions and BlockFi’s lawyers have stated that they have received substantial interest from the market for certain assets, and expect to receive even more bids in the future.
Crucial part of the proceedings
The sale of assets is a crucial part of the Chapter 11 bankruptcy proceedings, which aim to restore funds to creditors. BlockFi’s lawyer, Francis Petrie, stated that given the current financial situation of the company and the volatility in the cryptocurrency market, they need to act quickly to preserve the value of their assets.
However, BlockFi’s attempts to get its hands on millions of dollars worth of Robinhood stocks have hit a roadblock due to parallel legal proceedings in Antigua. The 56 million shares, worth approximately $577 million, are at the center of a complex legal dispute involving BlockFi, FTX, Sam Bankman-Fried (FTX founder), Antigua-based liquidators of the shell company that nominally owned the shares, and the U.S. Department of Justice (DOJ).
Who took the shares?
The shares have been seized by the DOJ, which is investigating Bankman-Fried for charges including wire fraud. Bankman-Fried has pleaded not guilty to these charges and has stated that he is willing to give the shares to FTX customers, though in court he opposed a related bid by FTX to claim ownership. The court in Antigua granted Bankman-Fried’s motion to stay the liquidation proceedings and has granted leave to appeal, which he must file within 21 days.
BlockFi’s bankruptcy was triggered by its dependence on FTX for a $400 million line of credit, which was followed by FTX’s own bankruptcy filing in November. Despite these events, a bankruptcy judge in New Jersey approved a $10 million BlockFi bonus pot, intended to keep its employees from leaving the company.
The recent developments in BlockFi’s case showcase the volatility and unpredictability of the crypto market and the difficulties that come with operating a crypto business. BlockFi’s story serves as a cautionary tale for other companies operating in this space, highlighting the importance of diversifying revenue streams and reducing dependency on any one source of funding.
Overall, the future remains uncertain for BlockFi, and it remains to be seen what the outcome of the asset sale and the parallel legal proceedings will be. Nevertheless, the crypto market continues to be a source of excitement and interest for investors, and the events surrounding BlockFi serve as an intriguing case study for those looking to understand the intricacies of the market.
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