BlockFi, a bankrupt cryptocurrency lender, has announced plans to liquidate its crypto lending platform, citing that a sale of the business wouldn't provide substantial value for its creditors, the Wall Street Journal reports.
The Jersey City-based company came to this conclusion after unsuccessful attempts to solicit sales of its digital assets platform and about 660,000 client accounts since January, attributing recent regulatory changes as a critical factor in the lack of suitable offers.
The amount recoverable by clients hinges heavily on the outcome of ongoing litigation against entities such as crypto exchange FTX, Alameda Research, Three Arrows Capital, and Core Scientific, which could collectively affect recoveries of up to $1 billion.Founded in 2017, BlockFi aimed to provide credit services to the cryptocurrency market and successfully raised funds from major investors of the likes of ConsenSys Ventures and Galaxy Digital. It expanded its services to include crypto-backed loans, compound interest accounts, and a zero-fee trading platform.
However, regulatory issues arose in 2021 when several states claimed BlockFi's interest accounts were unregistered securities. The situation worsened in 2022. It settled with the SEC for $100 million and faced a big blow following the collapse of FTX, a crucial credit facility provider.
BlockFi eventually filed for bankruptcy in November 2022, leaving more than 100,000 creditors in a state of uncertainty.