New Jersey-based bankrupt crypto lender BlockFi is looking to liquidate rather than sell its cryptocurrency lending platform after concluding that a sale might not benefit creditors.
BlockFi, in a court document filed with the US bankruptcy court for the District of New Jersey on May 12, said the firm is planning to liquidate its lending platform to repay creditors, as first reported by the Wall Street Journal.
According to the bankruptcy filing, the decision to self-liquidate comes after the company concluded that “there may be a lack of meaningful value to be generated from a sale.”
BlockFi started soliciting interest to sell its lending platform in January 2023. The sale also included approximately 660,000 client accounts comprising US and international client counts. However, recent regulatory issues form part of why the company may not get a meaningful value from a sale.
Meanwhile, BlockFi also stated that the chances of asset recovery for clients and creditors depend on the outcome of the ongoing litigations against its commercial counterparties. They include bankrupt crypto exchange FTX and its quant trading firm Alameda Research, beleaguered crypto hedge fund Arrows Capital (3AC), and bankrupt bitcoin miner Core Scientific. “Collectively, the success or failure of this litigation will make a difference of more than $1 billion to Clients.”
As reported by crypto.news, a US bankruptcy judge recently ruled that customers forfeited ownership to assets deposited in BlockFi’s interest-bearing accounts (BIA), with the judge stating that transfers made after BlockFi halted withdrawals, were void.