Bankrupt crypto lender BlockFi;has decided to;liquidate its lending platform since a potential sale would not generate enough value for its creditors.;
The decision was revealed through a document filed with the U.S.;Bankruptcy;Court in New Jersey, outlining the company’s Chapter 11 restructuring plan.;
The firm currently owes its top 50 creditors more than $1.3B.;
- BlockFi said it had been discussing the sale of its digital assets platform and nearly 660,000 client accounts with potential buyers since January.;
- As a result of the discussions, the firm concluded that a sale plan would not generate meaningful value for its creditors.
- The bankrupt lender also underlined that it did not receive offers that would maximize its value from potential buyers due to the recent regulatory changes.
- The documents added that the number of clients who will recover their funds would change based on the results of pending lawsuits against its bankrupt commercial counterparties, including FTX, Alameda Research, Three Arrows Capital (3AC), and Core Scientific.
- BlockFi said the failure or success of these lawsuits would make over $1B difference for clients.
- The restructuring plan was sent to creditors, involving more than 100,000 retail customers, for a vote, and;in response, the creditors accused BlockFi of deliberately causing delays in the trial proceedings and using nearly $22.5M of customer funds to purchase a $30M insurance policy.
BlockFi filed for;Chapter 11 bankruptcy;protection in November last year due to the volatility in the crypto market and its exposure to the collapsed crypto exchange FTX.;
- The move made the firm one of the several other crypto-related firms, including Celsius Network, Voyager Digital, and FTX, that went bankrupt after a prolonged crypto winter.;
- The bankrupt lender;also recently;obtained approval from a U.S. Judge to repay $297M to Wallet customers with non-interest-bearing accounts.
- The latest court document has shown the firm’s belief that the proposed liquidation plan is the fastest way to return the funds in digital wallet accounts to customers.