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: BlockFi’s big creditors include an indenture trustee firm, FTX and the SEC


The ripples from the bursting of the great cryptocurrency bubble landed on the shores of crypto lender BlockFi Monday as the cryptocurrency lender filed for bankruptcy protection after months of struggling to stay afloat.

BlockFi’s Chapter 11 filing in New Jersey federal bankruptcy court reveals that the company has over 100,000 creditors that are owed somewhere between $1 billion and $10 billion.

Only three unsecured creditor names are identified in the court documents so far — an indenture trustee firm representing a group of unnamed creditors, the Securities and Exchange Commission and the recently collapsed crypto exchange FTX.

At the top of the list a Fairfield, Conn.-based firm, Ankura Trust Company Ltd., which BlockFi says is owed a whopping $729 million. The company typically is brought in to represent the interests of others in a bankruptcy proceeding. A call to Ankura wasn’t immediately returned.

Next up is FTX, which had stepped in to bail BlockFi out this summer after the firm found itself on the brink of failure amid a liquidity crisis following the bankruptcy of other crypto outfits Three Arrows Capital and Celsius Network. 

At the time, FTX had emerged as a quasi-savior for many beleaguered crypto firms, buying up several and keeping them afloat. While BlockFi had once been valued as high as $3 billion, it needed emergency financing and FTX extended a $400 million revolving line of credit. FTX was clearly trying to stabilize itself by lending to BlockFi, but it’s unclear exactly how FTX manipulated the relationship. FTX’s U.S. arm is listed as having an unsecured claim of $275 million against BlockFi.

Just  four months later, FTX collapsed and found itself and its 30-year-old founder, Sam Bankman-Fried, under investigation by the Department of Justice and federal regulators amid allegations it was using customer money to back Bankman-Fried’s risky trading bets at his family office hedge fund.

After FTX filed for Chapter 11 bankruptcy on Nov. 11. BlockFi said it was heavily exposed to the crypto exchange’s failure and froze all withdrawals.      

Any money possibly recouped by FTX from BlockFI would ultimately go to help satisfy FTX’s numerous creditors, which the company has tallied so far as being over 1 million. 

Each new crypto-related bankruptcy filing has put further pressure on bitcoin

and other cryptocurrencies, partly due to the issues they caused unsecured creditors of the failed companies, many of which were held highly leveraged positions.

Lastly, the SEC is listed as being owed $30 million. That likely stems from a $100 million fine the agency levied against BlockFi earlier this year for failing to register the securities that it sold. The SEC did not reply to a request for comment.

BlockFi’s bankruptcy filing additionally lists 47 other unnamed creditors who are owed between $1 million and $47 million.

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