BlockFi
The business, the turning points, and the decisions behind them.
01 / WHAT IT BUILT
What the company did
BlockFi was a Jersey City-based crypto financial services company founded in 2017 by Zac Prince and Flori Marquez. It offered crypto-backed US dollar loans, interest-bearing accounts, zero-fee crypto trading and a crypto rewards credit card to retail and institutional customers, bridging traditional finance and crypto-asset markets. The company raised more than $1.4 billion in venture funding, paused withdrawals in November 2022 amid the collapse of FTX, and filed for Chapter 11 bankruptcy on November 28, 2022.
02 / BlockFi FAILURE REASONS
Failure factors supported by the current evidence
Reuters, citing BlockFi’s bankruptcy restructuring filing and BRG’s Mark Renzi, reports that substantial exposure to FTX created a liquidity crisis that was a major cause of the bankruptcy: loans to FTX affiliate Alameda and crypto trapped on FTX’s platform after FTX collapsed.
The filing states substantial FTX exposure created a liquidity crisis and was a major cause of the bankruptcy.
BlockFi said the crisis came from loans to Alameda and crypto held on FTX that became trapped there.
03 / EVENT HISTORY
Events in the structured record
- Founded
Zac Prince and Flori Marquez founded BlockFi in Jersey City, New Jersey, as a crypto-focused financial services company offering crypto-backed USD loans, interest-bearing accounts and trading, beginning lending in January 2018.
- FTX credit facility
After being hit by the crypto market downturn, BlockFi agreed a deal with FTX for a $400 million revolving credit facility, with FTX receiving an option to buy the company for up to $240 million.
- Withdrawals paused; Chapter 11 filing
On November 11, BlockFi paused client withdrawals citing exposure to FTX and its sister firm Alameda, and on November 28 it filed for Chapter 11 bankruptcy protection in New Jersey with eight affiliates, listing assets and liabilities between $1 billion and $10 billion and more than 100,000 creditors.
- Emerged from bankruptcy; wind-down began
On October 24, BlockFi emerged from bankruptcy under a court-approved plan, announced it would wind down operations, and began returning crypto assets to customers while pursuing recoveries through the FTX, Alameda and Three Arrows Capital bankruptcies.
- Web platform closed; Coinbase distribution
BlockFi closed its web platform and arranged for the remaining distribution of customer assets through a partnership with Coinbase.
04 / CONTEMPORARY REBUILD ASSESSMENT
Difficulty of rebuilding this project today
Material for this section is being gathered and checked. It will appear here once ready.
Overall assessment: Not completed
05 / CAUSAL CHAIN
How the factors connect
- 01
In its November 2022 Chapter 11 filing, BlockFi listed assets and liabilities of between $1 billion and $10 billion, owed money to more than 100,000 creditors, and held $256.5 million in cash on hand after selling $238.6 million of crypto assets to fund the bankruptcy.
- 02
Under its court-approved plan, BlockFi emerged from bankruptcy on October 24, 2023, began winding down operations, and started returning crypto assets to customers; it estimated customers with interest-bearing Earn accounts would recover between 39.4% and 100% of their account value.
- 03
BlockFi continued pursuing recoveries through the bankruptcies of FTX, Alameda and Three Arrows Capital, later closed its web platform, and arranged the remaining customer distributions through a partnership with Coinbase.
- 04
No reliable realized loss figure with clear subject, period and basis has been publicly disclosed; bankruptcy liabilities and customer recovery estimates are not substitutes for a loss figure.