According to the Financial Times, which cited loan documents it had seen, cryptocurrency lender BlockFi, which on Monday filed for bankruptcy protection, sued Emergent Fidelity Technologies, the company owned by FTX founder Sam Bankman-Fried, on the same day for Robinhood (HOOD) shares that had been pledged to BlockFi as collateral.
According to the complaint, on November 9 an agreement was made between BlockFi and Emergent Fidelity Technologies to guarantee repayment by an unknown borrower in exchange for the collateral of an undisclosed common stock. According to the Financial Times (FT), which cited court correspondence, the borrower was Bankman-Fried’s Alameda Research.
According to two people with knowledge of the situation, Bankman-Fried continued to try to sell his Robinhood shares after entering into the collateral agreement with the asset trading firm while trying to raise money before to FTX’s bankruptcy.
BlockFi Files For Bankruptcy: Domino Effect Continues
Days after halting withdrawals due to the lingering effects of exchange FTX’s bankruptcy filing, crypto lender BlockFi filed for bankruptcy protection on Monday.
The business announced that it was seeking Chapter 11 bankruptcy protection, indicating that it wanted to restructure while carrying on with the business in the interim. The firm has around $257 million in cash in hand, claims a press statement. A Bermuda-based affiliate is likewise submitting a similar form for liquidation.
BlockFi’s executives estimated the company has more than 100,000 creditors, and they marked off the ranges in the petition for the company. According to executives, the company’s assets and liabilities ranging from $1 billion to $10 billion.
As the overall bitcoin market shrank in June, the company reduced its personnel by around a fifth. One indicator of the market’s entire value, the market capitalization, dropped from almost $3 trillion in January to $1 trillion by June.
BlockFi CEO Zac Prince stated that the company had to liquidate a significant client following the failure of Three Arrows Capital, albeit he did not specify whether or not this client was Three Arrows. Soon after, the lender received a $250 million credit facility from the cryptocurrency exchange FTX. This credit facility ultimately became a $400 million credit facility that allowed FTX US to purchase the lender.