BlockFi, a crypto lending platform currently experiencing financial troubles, has sued Sam Bankman Fried’s holding, Emergent Fidelity Technologies Ltd over alleged collateral promised by disgraced crypto pioneer. BlockFi is aiming to enforce the provisions of a pledge agreement and collect back the collateral that belongs to the firm.
BlockFi is suing Bankman-Fried after hours of filing for bankruptcy protection. According to the complaint, BlockFi is demanding that Bankman-Fried give back certain collateral to which it claims it is entitled to. The complaint was filed in the district court and BlockFi also filed for bankruptcy protection.
The collateral in question is that owned by Bankman-Fried in Robinhood, an online trading startup. A document released by The Financial Times revealed that Bankman-Fried purchased about 7.6% of Robinhood in the early part of 2022.
According to the complaint, BlockFi had made an agreement with Emergent on the 9th of November under which the crypto lender would guarantee the repayment of an undisclosed borrower by putting up some “common stock” as collateral.
As per the complaint, the Zac Prince led company also sued ED&F Capital Markets, as the custodian agent under which the pledge agreement was made.
BlockFi Files for Bankruptcy Protection
BlockFi made an announcement on Monday that it was filing for Chapter 11 bankruptcy protection at a United States District court. The filing was made after the firm paused users’ withdrawals earlier in November over a lack of clarity on its position with the defunct FTX exchange.
BlockFi stated via a news report that it was carrying out a restructuring procedure to maximize value for its customers and stakeholders. The crypto lender said it currently has $256.9 million in cash which should be enough to fund some operations during the reorganization process.
The crypto lender highlighted that it will continue to concentrate on collecting all debts owed to the lender by counterparties, including FTX, as part of its restructuring activities as it continues to act in the best interest of its clients and stakeholders. BlockFi however, hinted that the recovery of assets from FTX and its contemporaries may be delayed because of FTX’s bankruptcy process that is still in court.
BlockFi’s CEO, Zac Prince announced in July that the firm signed an agreement with FTX.US for a $400 million revolving loan which was subject to customers’ funds and a choice to purchase BlockFi for a variable sum of up to $240 million depending on certain performance indicators.
(Long thread!)
Excited to share an update on our previously announced term sheet with @FTX_US – and how we've broadened the scope of the initial deal for the benefit of all key @BlockFi stakeholders.
— Zac Prince (@BlockFiZac) July 1, 2022
