Crypto lender BlockFi, which is based in New Jersey and facing bankruptcy, has decided to liquidate its cryptocurrency lending platform instead of selling it. The company believes that a sale may not be advantageous for its creditors.
BlockFi, in a legal filing submitted to the US bankruptcy court for the District of New Jersey on May 12, stated its intention to liquidate its lending platform in order to settle its debts with creditors. The Wall Street Journal was the first to report this development.
As per the bankruptcy filing, BlockFi decided to proceed with self-liquidation after determining that a sale might not result in significant value.
BlockFi began seeking buyers for its lending platform in January 2023, which also involved around 660,000 client accounts from the United States and other countries. However, the company’s recent regulatory challenges are contributing factors to the potential lack of significant value in a sale.
BlockFi mentioned that the possibility of recovering assets for clients and creditors relies on the results of the legal cases involving its business partners. These partners include bankrupt crypto exchange FTX, its quant trading firm Alameda Research, struggling crypto hedge fund Arrows Capital (3AC), and bankrupt bitcoin miner Core Scientific. The outcome of these litigations will have a significant impact, potentially exceeding $1 billion, on the clients’ interests.
According to crypto.news, a bankruptcy judge in the United States made a decision stating that customers no longer have ownership rights to the assets they deposited in BlockFi’s interest-bearing accounts (BIA). The judge ruled that any transfers made by customers after BlockFi stopped allowing withdrawals are considered invalid.
This information is for general knowledge only and should not be considered as advice for investing or making financial decisions.