BlockFi Collapse — November 2022
The New Jersey crypto lender filed Chapter 11 sixteen days after FTX, citing direct exposure to FTX and Alameda as the final blow on top of earlier losses to Three Arrows Capital.
BlockFi was a New Jersey-based crypto lending platform that allowed retail customers to earn interest on deposits and to borrow against crypto collateral. At peak it claimed approximately $10B in client assets.
BlockFi sustained an estimated $80M loss on its Three Arrows Capital exposure in summer 2022, partially offset by an emergency credit line from FTX that promised an option to acquire BlockFi outright. When FTX collapsed in November 2022, BlockFi lost access to that liquidity facility and discovered substantial direct loan exposure to Alameda Research as well.
On 28 November 2022 BlockFi filed Chapter 11 in the District of New Jersey. The petition listed liabilities of approximately $10B against assets of $1B. The reorganisation plan, confirmed in October 2023, distributed both in-kind crypto and dollar-denominated claims to creditors over the following year. Final distributions completed in 2024 returned approximately 39% of claim value measured at the petition date.
Timeline
- FTX credit facility announced
FTX provides a $400M revolver with an option to acquire BlockFi for up to $240M.
- 3AC default disclosed
BlockFi discloses approximately $80M loss on Three Arrows Capital exposure.
- FTX collapse renders FTX facility inaccessible
BlockFi pauses withdrawals the same day. Direct Alameda exposure becomes the central issue.
- Chapter 11 filed in New Jersey
Liabilities ~$10B against assets ~$1B. 450,000 affected customers.
- Reorganisation plan confirmed
Court approves distribution of in-kind crypto plus dollar claims.
- Final creditor distribution
Approximately 39% of petition-date claim value returned to customers.
Who was involved
- BlockFiexchangevictim
Legal record
- Lead Court
- District of New Jersey Bankruptcy Court
- Plan Confirmed
- 2023-10-03
- Chapter 11 Filed
- 2022-11-28
- Final Distribution
- 2024-10-31