Embattled crypto lender BlockFills files for bankruptcy in US

BlockFills has filed for Chapter 11 bankruptcy in the US after suspending deposits and withdrawals last month, citing poor crypto market conditions.

Crypto lending platform BlockFills has filed for bankruptcy in the US after the company halted customer deposits and withdrawals last month.

Reliz LTD, BlockFills’ operating company, along with three other related companies, filed for Chapter 11 bankruptcy in a Delaware bankruptcy court on Sunday in a bid to restructure the firm.

In the filing, BlockFills estimated it had assets between $50 million and $100 million and estimated liabilities between $100 million and $500 million.

BlockFills said in a statement that the bankruptcy would “preserve the value of the business and maximize recoveries for stakeholders,” with the decision coming after ”extensive discussions with investors, clients, creditors, and other stakeholders.”

The company said it had evaluated “all available strategic and financial alternatives” and that undertaking a bankruptcy restructuring “will provide the necessary time and structure to stabilize the business, pursue additional sources of liquidity and recovery, and explore potential strategic transactions.”

BlockFills did not immediately respond to a request for comment.

BlockFills suspended customer deposits and withdrawals last month, citing the need to protect its business and clients amid a broad crypto market downturn while it worked to restore liquidity to the platform.

In the lead-up to BlockFills’ decision, Bitcoin (BTC) tumbled from over $97,000 to under $64,000 between mid-January and early February, which happened as the cryptocurrency had already been trading down from its October peak of over $126,000.

Earlier this month, a US court temporarily froze 70.6 Bitcoin tied to BlockFills and ordered an accounting of customer funds after one of its clients, Dominion Capital, sued the company to accuse it of misappropriating customer assets and commingling funds.

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Dominion claimed that BlockFills executives “admitted to having commingled customer assets and having a balance sheet shortfall” on multiple occasions.

The Financial Times reported on March 6, citing people familiar with the matter, that BlockFills was preparing for a restructuring and was seeking advice from lawyers and a consulting firm.

BlockFills’ bankruptcy echoes other crypto lending companies that collapsed in 2022 under similar circumstances.

At the time, the collapse of the Terra blockchain caused a crypto market downturn that wiped out crypto lenders Celsius, Voyager Digital, BlockFi and Genesis, among others, which also eventually led to the collapse of crypto exchange FTX.

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Source: CoinTelegraph