On November 28, 2022, BlockFi Inc. and eight affiliates filed a petition for relief under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of New Jersey (Case No. 22-19361 MBK).  The initial filing asserted more than 100,000 creditors, with liabilities and assets ranging from $1 billion to $10 billion dollars, and $256.9 million dollars in cash which will be used to provide sufficient liquidity to support certain operations during the restructuring process.  In parallel with these chapter 11 cases, BlockFi International Ltd. a Bermuda incorporated company, also filed a petition with the Supreme Court of Bermuda for the appointment of joint provisional liquidators pursuant to section 161(e) of Bermuda’s Companies Act.

Chapter 11 is a type of bankruptcy designed to allow insolvent companies to restructure their financial obligations, through reorganization, sale or otherwise. Very few cryptocurrency companies have filed bankruptcy proceedings to date in the United States.  As a result, few decision address how digital assets will be treated in a bankruptcy proceeding and whether or not account holders will be able to sell or get back their cryptocurrency assets.

Customers of these BlockFi companies may wish to consult with their own counsel about how the bankruptcy proceeding will affect their rights and the value of their accounts.

If you have questions please contact the Louisiana Office of Financial Institutions, Securities Division, at 225-925-4512.