BlockFi

Last updated

BlockFi
Industry Cryptocurrency
Founded2017;8 years ago (2017)
Founders
  • Flori Marquez
  • Zac Prince
FateFiled for Chapter 11 bankruptcy protection in November 2022
Headquarters Jersey City, New Jersey, U.S.
Website blockfi.com

BlockFi was a digital asset lender founded by Zac Prince and Flori Marquez in 2017. [1] It was based in Jersey City, New Jersey. [2] [3] It was once valued at $3 billion. [4]

In July 2022, it was announced that the cryptocurrency exchange FTX made a deal with an option to buy BlockFi for up to $240 million. The deal included a $400 million credit facility for the company. [5] [6]

In November 2022, after the declaration of bankruptcy by FTX, the company halted withdrawals on its platform. [7] The firm disclosed "significant exposure" to FTX on November 14. The next day, the Wall Street Journal reported that BlockFi would likely file for bankruptcy, which was reaffirmed by reports compiled by Bloomberg News. [8] [9] [10] On November 28, BlockFi confirmed the reports and officially filed for Chapter 11 bankruptcy protection [11] with more than 100,000 creditors, according to filings. [12] [13] In March 2023, following the collapse of Silicon Valley Bank, the U.S. Trustee watchdog overseeing BlockFi's bankruptcy revealed that BlockFi had around $227 million in uninsured funds at the bank. [14] BlockFi's CEO Zac Prince testified in the trial of Sam Bankman-Fried, and stated that he thought BlockFi would not have gone bankrupt if it had not lost access to its funds in the FTX collapse. [15] In October 2023, BlockFi emerged from Chapter 11 bankruptcy and announced that it would begin winding down all of its remaining operations and assets post-bankruptcy. Over the next few months, crypto assets will be returned to customers at BlockFi until all assets are fully liquidated. BlockFi will continue to pursue payments from the bankruptcies of FTX and Three Arrows Capital during the liquidation process. [16]

Related Research Articles

A cryptocurrency exchange, or a digital currency exchange (DCE), is a business that allows customers to trade cryptocurrencies or digital currencies for other assets, such as conventional fiat money or other digital currencies. Exchanges may accept credit card payments, wire transfers or other forms of payment in exchange for digital currencies or cryptocurrencies. A cryptocurrency exchange can be a market maker that typically takes the bid–ask spreads as a transaction commission for its service or, as a matching platform, simply charges fees.

CoinDesk is a news site specializing in bitcoin and digital currencies. Founded by Shakil Khan, the firm also provides guides to bitcoin for those new to digital currencies.

<span class="mw-page-title-main">Digital Currency Group</span> American venture capital company

Digital Currency Group Inc. (DCG) is a venture capital company focusing on the digital currency market. It is located in Stamford, Connecticut. The company has the subsidiaries Foundry, Genesis, Grayscale Investments, and Luno. It also formerly owned CoinDesk.

Allan Joseph Bankman is an American legal scholar and psychologist. He is the Ralph M. Parsons Professor of Law and Business at Stanford Law School. He was also employed at FTX, the cryptocurrency company founded by his son, Sam Bankman-Fried, who is an entrepreneur and convicted felon. His tenure at FTX lasted until the company's bankruptcy and subsequent collapse in 2022.

A cryptocurrency bubble is a phenomenon where the market increasingly considers the going price of cryptocurrency assets to be inflated against their hypothetical value. The history of cryptocurrency has been marked by several speculative bubbles on a boom to bust cycle.

Binance Holdings Ltd., branded Binance, is a global company that operates the largest cryptocurrency exchange in terms of daily trading volume of cryptocurrencies. Binance was founded in 2017 by Changpeng Zhao, a developer who had previously created high-frequency trading software. Binance was initially based in China, then moved to Japan shortly before the Chinese government restricted cryptocurrency companies. Binance subsequently left Japan for Malta and currently has no official company headquarters.

Decentralized finance provides financial instruments and services through smart contracts on a programmable, permissionless blockchain. This approach reduces the need for intermediaries such as brokerages, exchanges, or banks. DeFi platforms enable users to lend or borrow funds, speculate on asset price movements using derivatives, trade cryptocurrencies, insure against risks, and earn interest in savings-like accounts. The DeFi ecosystem is built on a layered architecture and highly composable building blocks. While some applications offer high interest rates, they carry high risks. Coding errors and hacks are a common challenge in DeFi.

<span class="mw-page-title-main">Sam Bankman-Fried</span> American entrepreneur convicted of fraud (born 1992)

Samuel Benjamin Bankman-Fried, commonly known as SBF, is an American entrepreneur who was convicted of fraud and related crimes in November 2023. Bankman-Fried founded the FTX cryptocurrency exchange and was celebrated as a "poster boy" for crypto, with FTX having a global reach with more than 130 international affiliates. At the peak of his net worth, he was ranked the 41st-richest American in the Forbes 400.

FTX Trading Ltd., trading as FTX, is a bankrupt company that formerly operated a cryptocurrency exchange and crypto hedge fund. The exchange was founded in 2019 by Sam Bankman-Fried and Gary Wang and collapsed in 2022 after massive fraud perpetrated by Bankman-Fried and his partner Caroline Ellison forced the company to file for Chapter 11 bankruptcy.

<span class="mw-page-title-main">Celsius Network</span> American cryptocurrency company

Celsius Network LLC was a cryptocurrency company. Headquartered in Hoboken, New Jersey, Celsius maintained offices in four countries and operated globally. Users could deposit a range of cryptocurrency digital assets, including Bitcoin and Ethereum, into a Celsius wallet to earn a percentage yield, and could take out loans by pledging their cryptocurrencies as security. As of May 2022, the company had lent out $8 billion to clients and had almost $12 billion in assets under management.

Alameda Research was a cryptocurrency trading firm, co-founded in September 2017 by Sam Bankman-Fried and Tara MacAulay. In November 2022, FTX, Alameda's sister cryptocurrency exchange, experienced a solvency crisis, and both FTX and Alameda filed for Chapter 11 bankruptcy. That same month, anonymous sources told The Wall Street Journal that FTX had lent more than half of its customers' funds to Alameda, which was explicitly forbidden by FTX's terms-of-service.

Three Arrows Capital was a Singapore-based cryptocurrency hedge fund which was ordered to liquidate on 27 June 2022 by a court in the British Virgin Islands. It was founded in 2012 by Kyle Davies and Su Zhu. The company borrowed billions of dollars to fund its trading, and according to July 2022 bankruptcy filings, faces $3.5 billion in creditors' claims. The fund appears to have lost in excess of $3 billion over 2021 and 2022, making its collapse one of the largest hedge-fund trading losses of all time.

Caroline Ellison is an American business executive who was convicted of fraud in 2023 in relation to the bankruptcy of FTX. She was the CEO of Alameda Research, a trading firm affiliated with the FTX and founded by Sam Bankman-Fried. Ellison was terminated from her position after FTX and Alameda filed for bankruptcy. In 2022, Ellison pleaded guilty to two counts of wire fraud, two counts of conspiracy to commit wire fraud, conspiracy to commit securities fraud and conspiracy to commit money laundering.

Voyager Digital was a cryptocurrency brokerage company.

The bankruptcy of FTX, a Bahamas-based cryptocurrency exchange, began in November 2022. The collapse of FTX, caused by a spike in customer withdrawals that exposed an $8 billion hole in FTX's accounts, served as the impetus for its bankruptcy. Prior to its collapse, FTX was the third-largest cryptocurrency exchange by volume and had over one million users.

Silvergate Bank was a California bank founded in 1988. The company began providing services for cryptocurrency users in 2016, and conducted an IPO in 2019. In November 2022, concerns were raised about Silvergate's health, after a fall in cryptocurrency prices and the bankruptcy of FTX. In March 2023, the bank announced plans to wind down and liquidate. Its failure was one of the first in the 2023 United States banking crisis.

<span class="mw-page-title-main">Trial of Sam Bankman-Fried</span> 2023 trial of FTX founder

United States of America v. Samuel Bankman-Fried was a 2023 federal criminal trial in the United States District Court for the Southern District of New York. Financial entrepreneur Sam Bankman-Fried, commonly known as SBF, was convicted on seven charges of fraud and conspiracy following the collapse of his cryptocurrency exchange FTX in November 2022. After the jury's verdict in November 2023, on March 28, 2024, Bankman-Fried was sentenced to 25 years in federal prison.

<span class="mw-page-title-main">Erik Voorhees</span> American cryptocurrency entrepreneur

Erik Tristan Voorhees is an American cryptocurrency entrepreneur and founder of the cryptocurrency exchange ShapeShift. He also co-founded Satoshi Dice and was the Director of Marketing at BitInstant. He has been referred to as a crypto-libertarian and has advocated for "the separation of money and state" and views Bitcoin as a tool for decentralizing financial power and challenging government control over currency.

Arkham Intelligence, branded Arkham, is a global company that operates a cryptocurrency exchange platform as well as a public data application that enables users to analyze blockchain and cryptocurrency activity. Founded by Miguel Morel in 2020, the company's platform utilizes AI to identify and catalog the owners of blockchain addresses. Its partners include various cryptocurrency and blockchain companies.

Paradigm Operations (Paradigm) is an American investment firm based in San Francisco, California. The firm focuses on investments related to cryptocurrency and blockchain technology.

References

  1. ↑ Leising, Matthew (March 4, 2022). "Crypto Lender's Wall Street Ascent Is Born of Wife's Frustration" . Bloomberg News . Archived from the original on March 23, 2021.
  2. ↑ "BlockFi, a crypto firm, reaches a $100 million settlement for failing to register loan products". The New York Times. February 14, 2022. Retrieved November 15, 2022.
  3. ↑ "Crypto's Rapid Move Into Banking Elicits Alarm in Washington". The New York Times. September 5, 2021. Retrieved November 15, 2022.
  4. ↑ "Crypto Lender BlockFi Suspends Withdrawals in FTX Contagion". finance.yahoo.com.
  5. ↑ Paul Vigna; Denny Jacob (July 1, 2022). "FTX Strikes Deal With Option to Buy Crypto Lender BlockFi for Up to $240 Million". The Wall Street Journal . ISSN   0099-9660. Wikidata   Q115245435 . Retrieved November 16, 2022.
  6. ↑ Rooney, Kate (July 1, 2022). "FTX signs a deal giving it the option to buy crypto lender BlockFi". CNBC.
  7. ↑ Elaine Yu (November 10, 2022). "Crypto Lender BlockFi Halts Withdrawals, Citing FTX's Problems". The Wall Street Journal . ISSN   0099-9660. Wikidata   Q115245387 . Retrieved November 16, 2022.
  8. ↑ "Crypto lender BlockFi says it has significant exposure to FTX". Reuters. November 14, 2022. Retrieved November 15, 2022.
  9. ↑ Alexander Gladstone; Vicky Ge Huang; Soma Biswas (November 15, 2022). "BlockFi Prepares for Potential Bankruptcy as Crypto Contagion Spreads". The Wall Street Journal . ISSN   0099-9660. Wikidata   Q115245280 . Retrieved November 16, 2022.
  10. ↑ Massa, Annie; Butt, Rachel (November 16, 2022). "Crypto Lender BlockFi Plans Bankruptcy Filing Within Days in FTX Fallout". Bloomberg. Bloomberg News . Retrieved November 17, 2022.
  11. ↑ "Crypto lender BlockFi files for bankruptcy, seeking chapter 11 protection". November 29, 2022. Retrieved December 13, 2022.
  12. ↑ "BlockFi files for bankruptcy as FTX fallout spreads". CNBC. November 28, 2022. Retrieved November 28, 2022.
  13. ↑ "Crypto lender BlockFi files for bankruptcy in New Jersey". Reuters . Retrieved November 28, 2022.
  14. ↑ Yerak, Becky (March 10, 2023). "Bankrupt BlockFi Has $227 Million in Unprotected Funds at Silicon Valley Bank" . The Wall Street Journal . Archived from the original on March 11, 2023.
  15. ↑ Nicolle, Emily (March 10, 2023). "After Ellison, Crypto Takes Center Stage at Bankman-Fried Trial BlockFi CEO Zac Prince zeroes in on loans to Alameda" . Bloomberg.
  16. ↑ "Crypto lender BlockFi emerges bankruptcy". Reuters. October 24, 2023. Retrieved October 25, 2023.


This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.