BlockFi is the most recent crypto lender that filed for Chapter 11 bankruptcy, given the recent market turmoil caused by FTX’s collapse.
The ripple effect of crypto firms continues, with many exchanges and crypto-related projects bankrupting. The most recent addition to the list is BlockFi.
Simultaneously, BlockFi also sued Sam Bankman-Fried (SBF), the founder of FTX. This comes after reports show that SBF’s Emergent Fidelity Technologies used Robinhood (HOOD) shares as collateral to get a loan worth $275 million from BlockFi.
However, desperate to raise money to avoid bankruptcy, SBF tried to sell his Robinhood shares, despite having them as collateral for the loan from BlockFi.
Because of these events, many are questioning SEC’s involvement with BlockFi. SEC sued BlockFi for $100 million back in February of this year. There is an estimated $30 million still unpaid by BlockFi now that the latter filed for bankruptcy. However, nothing seems to be registered. Hence, users are wondering where the money is when SEC opted to “protect” retail investors. The truth, however, is quite different. Given that Gary Gensler is tied with SBF, the crypto community is now wondering how SEC is going to protect investors when they were the ones supposed to overlook all these deals, including the BlockFi loan to FTX.
Hence, BlockFi sued SBF and FTX on the very same day BlockFi filed for bankruptcy.