The latest bankrupt crypto platform BlockFi filed lawsuit against Sam Bankman-Fried’s holding company Emergent Fidelity Technologies to get its shareholdings.
BlockFi was a popular crypto lending platform but now it is fully bankrupt because of its exposure to a bankrupt crypto exchange FTX.us. On 28 November, BlockFi filed for bankruptcy under chapter 11 in a US-based bankruptcy court.
After the bankruptcy filing, BlockFi filed for another suit to sue the company of Sam Bankman-Fried (SBF), Emergent Fidelity Technologies. Through the suit, BlockFi aims to collect Robinhood shares (HOOD) which are under the holding of SBF’s company.
As per available information on behalf of the genuine media reports, BlockFi is demanding Emergent turnover collateral as part of a Nov. 9 pledge agreement that saw Emergent agree to a payment schedule with BlockFi that it has allegedly failed to pay.
In May of this year, SBF purchased 7.6% stakes in Robinhood crypto & stock platform via his Emergent investment company. At that time, his company purchased $648 million worth of HOOD shares.
Reasons behind BlockFi failure
No doubt that BlockFi was better at its level because it was based on the “crypto bank lender” business, which is a very common and successful business in every kind of money market.
But the mistake that BlockFi made was its exposure to bad companies. Initially when the FTX exchange started to face downfall then BlockFi confirmed that it had no exposure to FTX but later admitted that more than a $400 million credit line was with FTXUS, which was one of the subsidiaries of FTX.
Now the whole situation & storyline is clear, which confirmed that the majority of the BlockFi assets were in the business ecosystem of the FTX exchange and the bankruptcy of FTX resulted in the bankruptcy of BlockFi.