A lawyer for BlockFi told the first day hearing of its bankruptcy proceedings that the crypto lender has $355 million stuck on FTX and that the collapsed exchange’s sister company Alameda Research has defaulted on a $680 million loan.
BlockFi filed 15 motions on Nov. 28 which were approved by the court in the first day hearing on Nov. 29, including the redaction of personal details of its 50 largest creditors, and the appointment of Kroll Restructuring Administration as its claims and noticing agent — the same firm chosen by FTX for its chapter 11 bankruptcy case.
In a message emailed to worried clients, BlockFi noted that the approved motions allow it to continue “core operations” during the restructuring process, and also to continue to pay its employees and independent contractors. BlockFi estimates that its wages bill is around $5.8 million per month, and that it owed around $1.5 million in wages when it filed the motion on Nov. 28.
The message to clients said that BlockFi’s “singular focus” throughout the proceedings is “maximizing value for all clients and other stakeholders.”
According to a Nov. 29 CNBC report, BlockFi’s attorney, Joshua Sussberg, also added in the hearing that BlockFi plans to reopen withdrawals to customers at an unspecified time, and he was optimistic that the firm will be able to salvage the business after the restructuring.
While FTX and Alameda owe BlockFi around $1 billion, the state of financial obligations is made more complicated by the $400 million line of credit extended to BlockFi by FTX US on Jul. 1.
According to BlockFi, which cited the FTX collapse as the reason for its woes, it still owes $275 million to FTX US in a deal which it claims was agreed to by 89% of its shareholders.
The funds were provided to BlockFi after it was caught up in the contagion caused by the collapse of Terra’s stablecoin on May 10. BlockFi revealed that the loan is set to mature on Jun. 30 2027 and has an interest rate of 5%.
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Additionally, on Nov. 28 BlockFi sued a holding company of Bankman-Fried’s called Emergent Fidelity Technologies, seeking collateral that Emergent had pledged to pay on Nov. 9 which includes shares in the online brokerage Robinhood. The next hearing is set to be held on Jan. 9.
