Here’s a summary of BlockFi’s rise and fall:
– BlockFi, a crypto lender, was founded in 2017 by Zac Prince and Flori Marquez with the goal of providing credit services to the cryptocurrency market.
– The company secured initial funding from ConsenSys Ventures in 2018, followed by larger investments from Galaxy Digital and Valar Ventures.
– BlockFi introduced a high-yield crypto deposit account in 2019, allowing customers to earn interest on deposited cryptocurrencies.
– In 2020, BlockFi entered the crypto trading space by introducing a zero-fee trading platform.
– The company partnered with Silvergate Bank to enable customers to use cash deposits through wire transfers to purchase bitcoin.
– BlockFi invested in Grayscale’s Bitcoin Trust, taking a 5% stake in 2020.
– In August 2021, BlockFi raised $350 million, giving the company a valuation of $3 billion.
– However, BlockFi faced regulatory challenges in early 2021 when several states accused the company’s interest accounts of being unregistered securities.
– The SEC subsequently fined BlockFi $100 million in February 2022 and forced the company to halt new interest account sign-ups and prevent existing customers from adding further funds to their accounts.
– BlockFi’s valuation dropped to $1 billion in June 2022 following a significant drop in the value of cryptocurrencies.
– In dire straits, BlockFi obtained a $400 million credit line from FTX, a now-bankrupt cryptocurrency exchange.
– FTX declared bankruptcy in November 2022, forcing BlockFi to pause customer withdrawals due to uncertainty regarding FTX’s situation.
– California’s financial regulator revoked BlockFi’s lending license around this time.
– BlockFi officially filed for bankruptcy protection in late November 2022, leaving over 100,000 creditors in the lurch.
– It emerged that Alameda Research, a sister company of FTX, had defaulted on $680 million worth of loans to BlockFi.
– Following BlockFi’s bankruptcy filing, questions remained as to whether customers will be able to retrieve their funds.
– In a recent bankruptcy hearing, lawyers for BlockFi stated that the company held $355 million in cryptocurrency on FTX at the time of the latter’s bankruptcy.
– BlockFi has also taken legal action against Sam Bankman-Fried’s Emergent Fidelity Technologies, seeking recovery of Robinhood shares that had been used as collateral for a loan.
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