SNEAK PEEK
- Among the largest creditors are the trustee firm that manages BlockFi’s interest accounts, the SEC and FTX US.
- BlockFi filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court.
- The crypto lender has shared that it has $256.9 million in cash and will utilize it to offer enough liquidity to assist specific operations in the restructuring process.
BlockFi Inc. owes $1 billion plus to its three largest creditors which also includes $30 million to be paid to the U.S. Securities and Exchange Commission, which belongs to the $100 million settlement based on the bankruptcy filing by the company.
In total, BlockFi owes $1.3 billion to its 50 largest creditors and has between $1 billion and $10 billion in liabilities and assets. Though initial bankruptcy petitions require that firms check a box that’s next to ranges; however, according to the filing, BlockFi has 100,000 plus creditors.
Among the liabilities $729 million is owed to Ankura Trust Company, which is the trustee via which the firm operates its BlockFi Interest Accounts owing to part of its agreement with the Securities and Exchange Commission to both update as well as register the product.
In February, BlockFi suspended registration for interest-bearing accounts followed by releasing BlockFi Yield upon sending notification to the SEC. Securities that are registered under the Regulation D exemption of SEC are available to wealthy or accredited investors only.
On Monday, the firm filed its petition for Chapter 11 bankruptcy protection after speculation that BlockFi won’t continue to run after the FTX filing for bankruptcy.
BlockFi just filed for bankruptcy.
— Genevieve Roch-Decter, CFA (@GRDecter) November 28, 2022
Here’s what I know 🧵
After receiving a $400 million line of credit in July, BlockFi got immense exposure to FTX.
BlockFi experienced an exposure to 3AC though it managed to remain in business owing to the revolving line of credit it got from FTX. It was the time when Sam Bankman-Fried, former FTX CEO, shared his disappointment about companies and investors not helping industry’s struggling players. A few weeks before, Bankman-Fried’s firm was forced to confess not having one-to-one-reserves of customer funds when a liquidity crisis resulted from a bank run on the exchange.
BlockFi owes West Realm Shires Inc. $275 million. The deal had an agreement that FTX will own the company for a price of up to $240 million.
Yesterday we signed definitive agreements, subject to shareholder approval, with FTX US for:
— Zac Prince (@BlockFiZac) July 1, 2022
1. A $400M revolving credit facility which is subordinate to all client funds, and
2. An option to acquire BlockFi at a variable price of up to $240M based on performance triggers.
$49 million is another amount BlockFi owes to one of its other creditors. An institutional loan is the only other creditor that has some detail and shows that the claim is for $21.7 million; however, it is offset by $19.4 million in collateral.
