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BlockFi Bankrupt

The crypto trading and lending platform, BlockFi, voluntarily filed for Chapter 11 bankruptcy on 28th November 2022, adding it to the list of victims of the contagion that was activated by the collapse of FTX.


BlocFi files for Bankruptcy

What will happen to my money in BlockFi?

If BlockFi were to face financial difficulties, the fate of your money would depend on various factors, including the specific circumstances and regulatory measures in place. In such situations, it’s crucial to monitor news updates and communicate directly with BlockFi for guidance on how your funds would be affected and any potential steps you should take to protect your assets.


  • BlockFi files for Bankruptcy
  • What does this mean for the crypto market?
  • BlockFi Latest News
  • References
  • Conclusion
  • Frequently Asked Questions

BlockFi files for Bankruptcy

BlockFi suspended withdrawals from its platform, thus compounding the anxiety of customers who cannot access their deposits. BlockFi and FTX had become entwined as FTX promised to buy BlockFi when its crypto bear market flourished earlier in 2022.


What Does this Mean for the Crypto Market?

In 2017, BlockFi brought in hundreds of millions of dollars in investments from renowned investors and hedge funds. As crypto values soared in 2021, BlockFi revealed that it managed over $15 billion in assets, and the company even went ahead to launch the Bitcoin Rewards Visa Credit Card, similar to a cash-back credit card, earning the customers rewards in the form of Bitcoin. BlockFi’s clientele is comprised mainly of small retail investors whom the company offers instant and crypto-backed loans without a credit check. Additionally, the users could deposit crypto funds and trade individual coins and a myriad of currency pairs. Unfortunately, BlockFi’s financial model was the source of all its troubles and the reason for bankruptcy.


When the crypto market declined in 2022, BlockFi’s revenues also plunged, tipping the first domino of the company’s financial troubles. To ward off the crypto winter, BlockFi launched a $400 million credit line with FTX and borrowed $275 million upfront to cover its financial hurdles and calm the investors. Part of the terms of the deal was that FTX would purchase BlockFi for $240 million. For BlockFi, the credit line was a safety net that one of the most renowned and stable crypto companies had extended to it. When FTX’s liquidity dried up and customers continued to demand withdrawals, the company was forced to file for bankruptcy, causing a ripple effect across the crypto sector.


The details of BlockFi’s bankruptcy filing showed that the company owed cash to over 100,000 creditors, with Ankura Trust being the largest creditor at $729 million. West Realm Shires is the 2nd largest creditor, with $275 million owed. In addition, BlockFi listed the United States Securities and Exchange Commission (SEC) as one of its largest creditors at $30 million owed. The SEC revealed that BlockFi made false and misleading statements concerning its risk appetite and levels. Moreover, scores of Reddit users expressed concerns that their money may be gone because the crypto market is not regulated. 

BlockFi Latest News

BlockFi has submitted a series of petitions to the Court intending to obtain permission to continue its operations during the transition into Chapter 11. These petitions, known as “first-day” motions, include a request to establish a Key Employee Retention Plan to ensure the retention of crucial internal resources for essential business functions throughout the Chapter 11 process. Additionally, the Company has requested permission to pay employee wages and maintain employee benefits without interruption. It is anticipated that the Court will approve both of these requests. Furthermore, the Company has implemented an internal strategy to significantly reduce costs, including employee costs, to enhance its financial stability.


  • Trautman, L. J. (2022). The FTX Crypto Debacle: Largest Fraud Since Madoff?. Available at SSRN 4290093.
  • Schulp, J. J. (2022). Crypto Crash: Why the FTX Bubble Burst and the Harm to Consumers.
  • Naeem, S., Peinert, E., & Stoller, M. (2022). Gary Gensler Got It Right.
  • Sigalos, M. & Goswami, R. (2022). Crypto firm BlockFi files for bankruptcy as FTX fallout spreads. CNBC. https://www.cnbc.com/2022/11/28/blockfi-files-for-bankruptcy-as-ftx-fallout-spreads.html



In conclusion, the hypothetical scenario of BlockFi going bankrupt would have significant implications for its customers and the broader cryptocurrency industry. Customers’ funds and assets held with the platform could be at risk, potentially leading to financial losses. It underscores the importance of conducting thorough due diligence and risk assessment when engaging with any financial institution, especially in the cryptocurrency space. Additionally, it highlights the need for regulatory oversight and investor protection measures in the emerging world of digital finance.


If BlockFi were to face bankruptcy or financial difficulties, the fate of your funds would depend on various factors, including regulatory measures and the specific circumstances. It’s crucial to monitor updates and seek guidance from BlockFi on how your assets would be affected.

BlockFi is a cryptocurrency lending and trading platform. Like any financial institution, there are risks associated with using its services. It’s advisable to conduct thorough research, assess risk tolerance, and consider diversification when dealing with cryptocurrency platforms.

The level of regulatory protection for BlockFi customers can vary by region and jurisdiction. It’s essential to understand the regulatory framework in your location and how it applies to cryptocurrency platforms.

The ability to withdraw funds from BlockFi may be subject to specific terms and conditions outlined by the platform. It’s important to review BlockFi’s policies regarding withdrawals and understand any associated fees or limitations.

It’s generally advisable not to keep a significant amount of cryptocurrency on any platform, including BlockFi, for an extended period. Consider using hardware wallets or other secure storage options for long-term holdings.

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Written By: Allen Matshalaga


Allen is a professional forex trader, blogger, and online enthusiast who spends most of his time testing and reviewing legit ways of making money online and is determined to help others succeed.