BlockFi Bankruptcy Filing Shows It Owes SEC $30M – Bitcoin (BTC/USD), Ethereum (ETH/USD)

The US Securities and Exchange Commission (SEC) is one of the largest creditors of crypto lending companies BlockFi, which filed for bankruptcy after a series of failures in the digital asset market.

The regulator has a $30 million unsecured claim against the cryptocurrency lender, according to a filing filed Monday.

The SEC currently ranks behind ankura trust company, which is owed more than $729 million; West Reich Shires Inc., which operates FTX US and is owed $275 million, and an unidentified customer who is BlockFi’s fourth-largest creditor and is owed more than $48 million.

According to BlockFi’s website, Ankura served as a trustee for interest-bearing crypto accounts.

The recent collapse of cryptocurrency exchange FTX, a number of significant projects and companies that went under earlier this year, and a drop in the price of digital assets all contributed to BlockFi’s bankruptcy.

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In a statement, BlockFi said it will use Chapter 11 proceedings to “focus on the recovery of any obligations owed to BlockFi by its counterparties, including FTX and affiliates.”

BlockFi added that the recoveries would likely be delayed by FTX’s own bankruptcy.

A company that files for Chapter 11 bankruptcy is still able to operate while formulating a repayment strategy for its creditors.

Zac Prince and Flori Marquez founded BlockFi in 2017.

In the company’s early days, influential Wall Street investors backed the company Mike Novogratz; Valar Ventures, a venture capital firm sponsored by Peter Thiel; and Winklevoss capital.

When BlockFi started offering interest-bearing accounts with deposited returns Bitcoin BTC/USD and ether ETH/USD In 2019 she caused a stir.

Once the program went live, millions of dollars worth of deposits were made.

Regulators feared that customers would not be aware of the risk they were taking when investing in cryptocurrency lending.

A lawsuit against BlockFi was filed in July 2021 by securities regulators from Alabama, Texas, New Jersey, Kentucky and Vermont, alleging that the company was marketing unregistered securities.

In February, BlockFi agreed to pay the SEC and state regulators $100 million in response to claims that it marketed a service that paid customers high interest rates to illegally lend their digital tokens.

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