Bankruptcy court told FTX and Alameda owe BlockFi $1B… but it’s complicated

Blockfi

While BlockFi has attempted to separate itself from FTX and Alameda in its bankruptcy proceedings, it has many financial ties to firms owned by SBF.

A lawyer for BlockFi told the first day hearing of its bankruptcy proceedings that the crypto lender has $355 million stuck on FTX and that the collapsed exchange’s sister company Alameda Research has defaulted on a $680 million loan.

BlockFi filed 15 motions on Nov. 28 which were approved by the court in the first day hearing on Nov. 29, including the redaction of personal details of its 50 largest creditors, and the appointment of Kroll Restructuring Administration as its claims and noticing agent — the same firm chosen by FTX for its chapter 11 bankruptcy case.

In a message emailed to worried clients, BlockFi noted that the approved motions allow it to continue “core operations” during the restructuring process, and also to continue to pay its employees and independent contractors. BlockFi estimates that its wages bill is around $5.8 million per month, and that it owed around $1.5 million in wages when it filed the motion on Nov. 28.

The message to clients said that BlockFi’s “singular focus” throughout the proceedings is “maximizing value for all clients and other stakeholders.”

According to a Nov. 29 CNBC report, BlockFi’s attorney, Joshua Sussberg, also added in the hearing that BlockFi plans to reopen withdrawals to customers at an unspecified time, and he was optimistic that the firm will be able to salvage the business after the restructuring.

While FTX and Alameda owe BlockFi around $1 billion, the state of financial obligations is made more complicated by the $400 million line of credit extended to BlockFi by FTX US on Jul. 1.

According to BlockFi, which cited the FTX collapse as the reason for its woes, it still owes $275 million to FTX US in a deal which it claims was agreed to by 89% of its shareholders.

The funds were provided to BlockFi after it was caught up in the contagion caused by the collapse of Terra’s stablecoin on May 10. BlockFi revealed that the loan is set to mature on Jun. 30 2027 and has an interest rate of 5%.

Additionally, on Nov. 28 BlockFi sued a holding company of Bankman-Fried’s called Emergent Fidelity Technologies, seeking collateral that Emergent had pledged to pay on Nov. 9 which includes shares in the online brokerage Robinhood. The next hearing is set to be held on Jan. 9.

*Timeline of BlockFi’s history. Source: First Day Hearing Presentation.*

<div>BlockFi sues FTX's Bankman-Fried over shares in Robinhood</div>

Bankruptcy

BlockFi is demanding Bankman-Fried’s investment company turn over its shares in Robinhood as collateral it agreed to pay as part of a pledge agreement.

Newly-bankrupt crypto lending platform BlockFi has filed a lawsuit against Sam Bankman-Fried’s holding company Emergent Fidelity Technologies seeking his shares in Robinhood that were pledged as collateral earlier in November.

The suit was filed on Nov. 28 in the United States Bankruptcy Court for the District of New Jersey just hours after BlockFi filed for Chapter 11 bankruptcy in the same court.

As per the filing, BlockFi is demanding Emergent turnover collateral as part of a Nov. 9 pledge agreement that saw Emergent agree to a payment schedule with BlockFi that it has allegedly failed to pay.

BlockFi names the collateral as “including certain shares of common stock.”

In May, Bankman-Fried acquired a 7.6% stake in the online brokerage firm Robinhood, buying a total of $648 million in Robinhood shares through his Emergent investment company.

BlockFi is one of the latest firms to file for bankruptcy as a result of the collapse of FTX crypto exchange.

The crypto firm initially previously denied that a majority of its assets were held on FTX earlier in the month, but also acknowledged “significant exposure” to FTX.

In its bankruptcy filing, BlockFi stated that it has assets between $1 billion and $10 billion with liabilities in the same range, along with over 100,000 creditors.

emergent