Bankrupt crypto lender BlockFi has decided to liquidate its crypto lending platform stating that selling will not generate enough value for its creditors.

The firm, which owes its top 50 creditors more than $1.3 billion, filed its Chapter 11 restructuring plan with US Bankruptcy Court on May 12. The plan would be sent to its creditors, who would vote on it.

According to the New Jersey-based company, it decided to liquidate after concluding that a sale might not generate meaningful value for its creditors. The company claimed to have been discussing with potential buyers since January and cited the recent regulatory concerns as one of the reasons it could not get a good offer.

Earlier in the month, the firm received permission to return $297 million to certain customers as part of its bankruptcy proceedings.

However, the bankrupt lender noted that the amount that creditors will get depends mainly on the outcome of its pending suit against Alameda Research, FTX, Three Arrows Capital, and crypto miner Core Scientific.

The lender said successful litigation against all these counterparties “will make a difference of in excess of $1 billion” for clients. Interestingly, all these companies have also filed for bankruptcy.

The company projected about $1.6 billion in recoveries from different accounts, noting that actual recoveries might differ significantly from projected numbers.

The most crucial factor would be the success of its claims against Sam Bankman-Fried’s failed crypto companies — FTX and Alameda. BlockFi has an outstanding loan of $671 million in crypto to Alameda Research and another $355 million stock on the FTX exchange.

The court has already ordered BlockFi to return almost $300 million to its custodial wallet users, saying they belong to the clients and not the bankruptcy estate. The hearing of the plan is set for June 20.

The post Bankrupt lender BlockFi to liquidate lending platform appeared first on CryptoSlate.

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