Crypto lending company, BlockFi, has declared its successful emergence from bankruptcy, effective October 24. In the financial world, ’emergence’ refers to a company’s ability to successfully reorganize its finances to start repaying its creditors. BlockFi’s emergence signifies the start of the recovery process for customer assets held by third parties and the continuation of reconciling customer claims.
The firm expressed its efficient and rapid transition, noting, “BlockFi reached its Effective Date more swiftly than many other retail crypto companies.”
This announcement comes in the wake of BlockFi’s bankruptcy filing on November 28, a move that followed closely behind the downfall of crypto exchange FTX and its affiliate, Alameda Research. BlockFi had a staggering $1.2 billion exposure to these entities, now accused of a multi-billion dollar fraud using customer funds.
BlockFi’s future endeavors will involve attempts to reclaim assets from bankrupt entities, including FTX, Alameda, and Three Arrow Capital (3AC). They believe successful litigation could potentially enhance client recoveries.
Presently, BlockFi’s custodial wallet customers can place withdrawal requests. However, customers of BlockFi’s interest-bearing account (BIA) and loan schemes might have to wait until early 2024 for their first distributions. Recovery from FTX and associated firms will influence any further distributions.
Meanwhile, FTX contemplates a revival of its exchange, with former customers possibly gaining a stake in the renewed establishment. Other strategies being considered are partnering with another company or selling the exchange outright.
Last year also saw the collapse of trading entities like Celsius, Voyager, and Genesis. Genesis, in particular, is suspected to be a victim of FTX’s fraudulent actions. Caroline Ellison, in her recent court statement, asserted that Genesis was duped by ex-Alameda’s chief with a manipulated balance sheet.
BlockFi’s ex-CEO, Zac Prince, blamed Alameda for similar deceitful practices, accusing them of hiding its loans from FTX in the provided financial statements.
Conversely, some of BlockFi’s creditors have alleged that Prince lent nearly a billion dollars to Alameda, despite being aware of their precarious financial condition.