Home | Breaking | Sam Bankman-Fried’s Cryptocurrency Empire Owe BlockFi $1B

Sam Bankman-Fried’s Cryptocurrency Empire Owe BlockFi $1B

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Sam Bankman Fried

The court has confirmed that FTX and Alameda owe BlockFi $1 billion after the former companies filed for chapter 11 bankruptcy protection. BlockFi’s attorney expressed optimism that the company could be saved after the restructuring.

FTX and Alameda Owe BlockFi $1 Billion

On the first day of bankruptcy hearings for BlockFi, the company disclosed that FTX and Alameda Research owed it more than $1 billion. Comprising $671 million on a defaulted loan to Alameda and $355 million in funds stuck on its crypto exchange. On Monday, BlockFi and eight of its affiliates filed for Chapter 11 bankruptcy protection.

BlockFi appeared in bankruptcy court in Trenton, New Jersey on Tuesday, seeking approval to keep operating while it tries to develop a plan to repay creditors owed more than $1 billion by reorganizing or finding a buyer. According to the cryptocurrency lender’s attorneys, BlockFi plans to reopen withdrawals and maximize client recoveries.

The New Jersey court judge approved BlockFi’s request to keep the list of creditor names redacted, as was the case with FTX. BlockFi revealed in its bankruptcy petition that it had more than 100,000 creditors with assets and liabilities between $1 billion and $10 billion.

BlockFi Complicated Ties With FTX

BlockFi owes FTX.US about $275 million, a sum that was part of a lending package designed to help the company survive the drop in crypto prices that pushed multiple companies into bankruptcy. According to BlockFi, the loan has a 5% interest rate and is due on June 30, 2027.

The troubles of the cryptocurrency lender began especially after the collapse of Terra. BlockFi suffered a roughly $80 million loss on defaulted loan obligations owed by bankrupt crypto hedge fund Three Arrows Capital.

It is not the first occasion that FTX and the quantitative trading firm of Sam Bankman-Fried’s crypto empire, Alameda Research, disclose that they owed money to the companies with which they inked bailout deals. During the collapse of Terra’s stablecoin, Alameda Research offered Voyager Digital a $500 million line of credit in June. A month later when Voyager Digital filed for bankruptcy, court documents showed that the quantitative trading firm owes Voyager $377 million.

On the other hand, according to a CNBC report, BlockFi’s lawyers expressed optimism at the hearing that the company is in a good position to restructure, salvage the business and come out of bankruptcy.

John Asher

John Asher

I am a crypto-enthusiast that likes to write about the blockchain industry. Mostly, I'm interested in the gaming industry and how it will revolutionize in-game asset ownership.

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