The 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.
New Jersey-based BlockFi, founded by fintech executive-turned-crypto entrepreneur Zac Prince, said in a bankruptcy filing that its substantial exposure to FTX created a liquidity crisis. FTX, founded by Sam Bankman-Fried, filed for protection in the United States this month after traders pulled $6 billion from the platform in three days and rival exchange Binance abandoned a rescue deal.
Accordingly, one wants to "stabilize the business" and give the "company the opportunity to complete a comprehensive restructuring transaction that maximizes value for all customers and other stakeholders".
The bankruptcy is related to the collapse of the crypto exchange FTX. BlockFi recently declared “significant loss opportunities” to the crypto company founded by Sam Bankman-Fried.
BlockFi's financial advisor, Mark Renzi, meanwhile, reiterated: "BlockFi looks forward to a transparent process that achieves the best outcome for all customers and other stakeholders."
BlockFi said the liquidity crisis was due to its exposure to FTX via loans to Alameda, a crypto trading firm affiliated with FTX, as well as cryptocurrencies held on FTX's platform that became trapped there. BlockFi listed its assets and liabilities as being between $1 billion and $10 billion.
The filing in a New Jersey court comes as crypto prices have plummeted. The price of bitcoin , the most popular digital currency by far, is down more than 70% from a 2021 peak.