The dramatic collapse of cryptocurrency company FTX in early November continues to reverberate throughout the virtual currency industry.
Another of the crypto companies, BlockFi, filed for bankruptcy in the US on Monday.
The company had already halted most activity on its platform, citing “significant exposure” to FTX.
BlockFi said it is seeking court protection to restructure, pay off its debts and recover money for investors.
The company received a bailout from FTX earlier this year when cryptocurrency values plummeted.
But FTX, a digital currency trading platform, had its own problems this month, as people rushed to withdraw money from the site amid doubts about their finances.
The so-called “king of cryptocurrencies” Sam Bankman-Fried, who was the founder and CEO of FTX, resigned and the firm filed for bankruptcy.
The crash shook confidence in the crypto industry and triggered an investigation by regulators.
BlockFi, which offered loans and other financial services backed by borrowers’ crypto assets, described FTX’s collapse as “shocking.”
In the court filing, New Jersey-based BlockFi said it owes money to more than 100,000 creditors.
It listed FTX as its second-biggest creditor, with $275 million owed on a loan extended earlier this year.
It also owes $30 million to the US financial regulator, the Securities and Exchange Commission, which earlier this year found that the company misregistered its products and misled the public about the risk levels in its loan portfolio. and credit activity.
BlockFi said filing for Chapter 11 bankruptcy would allow the company to develop a “reorganization plan that maximizes value for all stakeholders, including our valued customers.”
The company reported that it has nearly $257 million in cash on hand.
“Since inception, BlockFi has worked to positively shape the cryptocurrency industry and move the sector forward,” described Mark Renzi of Berkeley Research Group, the company’s financial adviser.
“BlockFi expects a transparent process that achieves the best outcome for all customers and other stakeholders,” he added.
Founded in 2017, BlockFi had been touted as a bridge between cryptocurrencies and traditional financial products.
In recent years, it has added hundreds of millions of big investors in the technology industry, including Bain Capital Ventures and Tiger Global.
Last year, when cryptocurrency values soared, he said he managed more than $15 billion in assets.
BlockFi is not the only company affected after cryptocurrency prices plummeted earlier this year.
The value of the best-known digital currency, bitcoin, fell from more than $64,000 a year ago to less than $20,000 in June.
Celsius Network and Voyager Digital are among the other companies that have also filed for bankruptcy.
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