Markets News Report
May 23, 2023

BlockFi Reorganization Plan Withdrawn: What It Means for Investors

In Brief

Blockchain-lender BlockFi took back statements it made earlier this month about a plan to reorganize which it said was done “prematurely.”

The company released a “corrective letter to creditors” on Friday.

As earlier reported by BlockFi, which is working to establish a new financing structure, the statement was prematurely made. BlockFi has since taken back those statements.

BlockFi Reorganization Plan Withdrawn: What It Means for Investors

On Friday, BlockFi sent a corrective letter to creditors to the court docket, urging them to disregard certain statements posted to the court website and Twitter.

“The Court has directed BlockFi to publish this notification on behalf of the Unsecured Creditors Committee to notify that the Court has not yet approved BlockFi’s disclosure statement or BlockFi’s ability to solicit acceptances of its proposal,” the letter reads.

According to the BlockFi Official Committee of Unsecured Creditors, BlockFi’s reorganization plan is not supported by the plan. The Committee says the proposal in question is wrong, as it includes too many parties. In addition to other issues, the Committee believes the proposal allows BlockFi to free up litigation claims against former directors and officers who committed significant misconduct that harmed BlockFi and its customers.

In November, BlockFi filed for Chapter 11 bankruptcy following the fallout of failed cryptocurrency exchange FTX. So, the crypto lender paused withdrawals on Nov. 16, and it claimed it had significant exposure to FTX and its affiliated companies. As of 2021, BlockFi had between $14 billion and $20 billion worth of customer deposits and had lent out $7.5 billion.

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About The Author

Nik is an accomplished analyst and writer at Metaverse Post, specializing in delivering cutting-edge insights into the fast-paced world of technology, with a particular emphasis on AI/ML, XR, VR, on-chain analytics, and blockchain development. His articles engage and inform a diverse audience, helping them stay ahead of the technological curve. Possessing a Master's degree in Economics and Management, Nik has a solid grasp of the nuances of the business world and its intersection with emergent technologies.

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Nik Asti
Nik Asti

Nik is an accomplished analyst and writer at Metaverse Post, specializing in delivering cutting-edge insights into the fast-paced world of technology, with a particular emphasis on AI/ML, XR, VR, on-chain analytics, and blockchain development. His articles engage and inform a diverse audience, helping them stay ahead of the technological curve. Possessing a Master's degree in Economics and Management, Nik has a solid grasp of the nuances of the business world and its intersection with emergent technologies.

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