BlockFi-nally Goes Bankrupt | CoinSnacks

BlockFi-nally Goes Bankrupt

After months of uncertainty, BlockFi has finally kicked the can.

When BlockFi’s financial troubles were first revealed in July, FTX and SBF appeared to be the perfect saviors – angels sent from crypto heaven to save BlockFi creditors from a lengthy bankruptcy.

Oh, what sweet summer children we were…

As we are all too painfully aware, FTX has gone bust. And, unfortunately, BlockFi was not able to escape the blast radius quickly enough.

Hits on Hits

In many ways, you have to feel for BlockFi. Yes, their current woes were largely self-inflicted. We don’t dispute that.

But just look at the string of unfortunate events raining hell down on BlockFi in recent months:

After all of this, the only thing that kept BlockFi standing was the $400 million line of credit from FTX. With the credit gone, BlockFi has finally fallen.

Again, this is largely BlockFi’s own fault. However, the simultaneous combustion of many of crypto’s largest players definitely didn’t help the cause.

The Bankruptcy

Simply put, the bankruptcy filing is pretty rough.

With only $257 million in cash on hand, north of 100,000 creditors, and assets and liabilities between $1 and $10 billion, the odds of retail investors getting their money back are unfortunately slim to none. Even the SEC has a $30 million unsecured claim with BlockFi.

At this point, if you have money stuck in BlockFi, it’s probably time to write that down to $0.

At the end of the day, the contagion from the LUNA / 3AC / FTX collapses is what may have exacerbated BlockFi’s bankruptcy, but what really caused it was the business model of lending customer deposits to high-risk outlets that were taking reckless bets with leverage.

What BlockFi’s management team did was grossly incompetent and one more reason why investors should steer away from leverage and be skeptical of third parties with lofty promises.

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