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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.


  • BlockFi is a user-friendly platform with several features and services.
  • Charges high withdrawal fees, and there are only a few cryptocurrencies for selection.

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


CEO & Founder of the AVFX Trading HUB Company/Website

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.