BlockFi

BlockFi was a cryptocurrency lending platform founded in 2017 that offered interest-bearing accounts, crypto-backed loans, and trading services.¹²¹³¹⁸ The company filed for Chapter 11 bankruptcy in November 2022 after pausing customer withdrawals due to significant exposure to FTX.²³⁷¹³ BlockFi's liquidation plan was approved by a bankruptcy court in September 2023, with unsecured creditors expected to recover between 35% and 63% of what they are owed.³

Timeline

Date	Event	Source
2017	BlockFi was founded.	121318
2018-02	BlockFi raised a $2 million seed round.	12
2018-06	BlockFi raised a $2 million seed round led by Galaxy Digital.	12
2018-12	BlockFi raised a $4 million seed round led by Akuna Capital.	12
2019-08	BlockFi raised an $18 million Series A round led by Valar Ventures.	12
2020-02	BlockFi raised a $30 million Series B round led by Valar Ventures.	1215
2020-08	BlockFi raised a $50 million Series C round led by Morgan Creek Digital.	12
2021-02	BlockFi raised a $350 million Series D round at a $3 billion valuation.	1216
2021-08	BlockFi raised a $500 million Series E round at a $4.5 billion valuation.	12
2022-03	BlockFi raised a $277.46 million Series E round at a $4.75 billion valuation.	13
2022-06	BlockFi raised $250 million in debt financing from Sam Bankman-Fried.	18
2022-11	BlockFi filed for Chapter 11 bankruptcy.	23713
2023-09-26	Bankruptcy court approved BlockFi's liquidation plan.	3
2024-10-24	BlockFi's Chapter 11 bankruptcy case was closed.	13

Money raised

BlockFi raised a total of $1.3 billion across 9 funding rounds.¹⁸ In February 2018, BlockFi raised a $2 million seed round.¹² In June 2018, BlockFi raised a $2 million seed round led by Galaxy Digital.¹² In December 2018, BlockFi raised a $4 million seed round led by Akuna Capital.¹² In August 2019, BlockFi raised an $18 million Series A round led by Valar Ventures.¹² In February 2020, BlockFi raised a $30 million Series B round led by Valar Ventures.¹²¹⁵ In August 2020, BlockFi raised a $50 million Series C round led by Morgan Creek Digital at a $400 million valuation.¹² In February 2021, BlockFi raised a $350 million Series D round at a $3 billion valuation.¹²¹⁶ In August 2021, BlockFi raised a $500 million Series E round at a $4.5 billion valuation.¹² In March 2022, BlockFi raised a $277.46 million Series E round at a $4.75 billion valuation.¹³ In June 2022, BlockFi raised $250 million in debt financing from Sam Bankman-Fried.¹⁸

Investors named in the sources: Galaxy Digital¹², PJC¹², ConsenSys Mesh¹², Alumni Ventures¹², Valar Ventures¹²¹⁵, CMT Digital¹², Morgan Creek Digital¹², Winklevoss Capital¹², Akuna Capital¹², Bain Capital Ventures¹², Bracket Capital¹², DST Global¹², Pomp Investments¹², Tiger Global¹², Rose Park Advisors¹², John Fontein¹², Definitive Capital¹², Castor Ventures¹², Investlink Holdings¹², Empede Capital¹², Sam Bankman-Fried¹⁸, Hedosophia¹⁸, Daniel Loeb¹⁸, Alt Capital¹⁸, Craft Ventures¹⁸, Founders Fund¹⁸, Rebel Fund¹⁸, Saga¹⁸, Todd and Rahul's Angel Fund¹⁸, Mathilde Collin¹⁸, Max Mullen¹⁸, Parker Conrad¹⁸, Sahil Lavingia¹⁸, Sam Altman¹⁸, Coinbase Ventures¹⁸, Bain Capital¹⁸, Tiger Global¹⁸, Stefan Cohen¹⁸, Breyer Capital¹⁸, Jump Capital¹⁸, Paradigm¹⁸, Susquehanna International Group¹⁸, Anthony Pompliano¹⁸, Alliance of Angels¹⁸, Archetype¹⁸, Baukunst¹⁸, Cadenza Capital Management¹⁸, CAVU Venture Partners¹⁸, Delta Blockchain Fund¹⁸, Formic Ventures¹⁸, Intuition Capital¹⁸, LAUNCH¹⁸, Manifold¹⁸, Qiming Venture Partners¹⁸, William Guo¹⁸, Torch Capital¹⁸, Alain Hanover¹⁸, Bill Gates¹⁸, George Godula¹⁸, Jehan Chu¹⁸, Kevin Weil¹⁸, Kurt Bilafer¹⁸, Marc Benioff¹⁸, Mark Cuban¹⁸, Matthew Dellavedova¹⁸, Nelson Chu¹⁸, Scott Becker¹⁸, Stephen Garden¹⁸, Avon Ventures¹⁸, CMT Digital¹⁸, Hudson River Trading¹³, Third Prime Capital Management¹³, Gaingels¹³.

What happened

BlockFi was founded in 2017 by Zac Prince and Flori Marquez.¹²¹³¹⁸ BlockFi was a cryptocurrency lending platform that provided trade execution, crypto-backed loans, and interest-bearing accounts for retail and institutional investors.¹²¹⁸ BlockFi partnered with custodians like Gemini for asset storage.¹² BlockFi served retail and institutional borrowers across multiple US states.¹² BlockFi offered interest-bearing accounts that paid yields on cryptocurrency deposits.⁸¹²¹⁵

BlockFi's interest account offered a 7.5% annual percentage yield as of July 2021.⁸ BlockFi also offered US dollar loans backed by client-held Bitcoin and Ethereum collateral.¹² BlockFi launched a Visa rewards credit card linked to stablecoin holdings.¹² By early 2021, BlockFi had over 225,000 users and more than $15 billion in assets under management.¹² BlockFi's monthly recurring revenue exceeded $50 million in early 2021.¹²

BlockFi's revenue was $50 million as of August 2021.¹² BlockFi's revenue had grown tenfold over the year prior to August 2020.¹² BlockFi's revenue increased by more than 20x in the 12 months before February 2020.¹⁵ BlockFi had approximately $650 million in assets under management in February 2020.¹⁵ BlockFi had a headcount of approximately 75 people in February 2020.¹⁵

BlockFi planned to increase headcount to 125-150 people in 2020.¹⁵ BlockFi employed approximately 900 people before its bankruptcy.¹⁸ Alabama, Texas, and Vermont also raised concerns about BlockFi's interest-bearing accounts.⁸ State regulators alleged that BlockFi's interest accounts were unregistered securities.⁸ BlockFi stated that it believed its interest accounts were lawful and not securities.⁸

BlockFi had obtained money transmitter and lending licenses in several states.⁸ BlockFi settled with the SEC and paid a $100 million penalty for unregistered securities offerings.¹⁸ The settlement required BlockFi to stop offering its interest product to U.S. users until it came into compliance.⁹ BlockFi participated in an FTX fundraising round to the tune of $250 million.⁷ FTX US extended BlockFi a $400 million revolving credit facility, of which BlockFi used $275 million.⁷

BlockFi cited significant exposure to FTX as the reason for pausing withdrawals.⁷ BlockFi filed for Chapter 11 bankruptcy in November 2022.²³⁷¹³ BlockFi's bankruptcy filing stated that its substantial exposure to FTX created a liquidity crisis.² BlockFi was one of FTX's largest creditors and debtors.⁷ BlockFi's unsecured creditors included the SEC, which was owed $30,000,000.⁷

BlockFi's liquidation plan was approved by the bankruptcy court on September 26, 2023.³ BlockFi unsecured creditors could get between roughly 35% to 63% of what they are owed.³ BlockFi has said the outcome of its disputes with FTX and Three Arrows Capital could swing creditor recoveries by US$1 billion.³ BlockFi settled a dispute with the creditors committee over potential legal claims against the company's senior management.³ The creditors committee alleged management ignored red flags before lending to Bankman-Fried's platform.³

Judge Kaplan overruled challenges by the US Justice Department's bankruptcy watchdog to legal releases benefiting BlockFi senior managers.³ The creditors committee said BlockFi's bankruptcy has been a bitter process but the settlement avoided administrative expenses that could have reduced customer recoveries.³ The creditors committee said it is hopeful payments to BlockFi creditors will commence in 2023.³ BlockFi's Chapter 11 bankruptcy case was closed on October 24, 2024.¹³ BlockFi emerged from bankruptcy in late 2023 to wind down operations.¹⁸

BlockFi partnered with Coinbase to facilitate final distributions to its remaining creditors.¹⁸ Some BlockFi creditors are slated to receive partial repayment in Bitcoin or Ethereum.³ BlockFi's customers were unable to withdraw funds after the platform paused withdrawals.³ BlockFi's unsecured creditors were initially assumed to never see their assets again.⁷ BlockFi's bankruptcy filing formalized that unsecured creditors' assets were considered unrecoverable and worthless.⁷

BlockFi's employees numbered approximately 900 before the bankruptcy.¹⁸ BlockFi's founders were Zac Prince and Flori Marquez.¹²¹³¹⁸ Zac Prince was the CEO of BlockFi.¹³ Flori Marquez was the SVP of Operations and later Co-Founder and Chief Operating Officer.¹³¹⁸ BlockFi's CTO was Mahesh Paolini-Subramanya.¹⁸

BlockFi's Chief Growth Officer was Wittney Rachlin.¹⁸ BlockFi's GM of Institutions was Rene van Kesteren.¹⁸ BlockFi's VP of Product Delivery, Mobile & Web was John Bekas.¹⁸ BlockFi's Director of Growth and Customer Acquisition was Brad Michelson.¹⁸ BlockFi's VP User Acquisition was Russell Smith.¹⁸

BlockFi's Product Management was Jared Franklin.¹⁸

Legal outcomes

• filedVermont issued a 30-day show-cause order against BlockFi.⁸
• settledBlockFi settled with the SEC and paid a $100 million penalty for unregistered securities offerings.¹⁸
• settledThe settlement required BlockFi to stop offering its interest product to U.S. users until it came into compliance.⁹
• filedBlockFi filed for Chapter 11 bankruptcy in November 2022.²³⁷¹³
• settledBlockFi's liquidation plan was approved by the bankruptcy court on September 26, 2023.³
• settledBlockFi settled a dispute with the creditors committee over potential legal claims against the company's senior management.³
• filedThe creditors committee alleged management ignored red flags before lending to Bankman-Fried's platform.³
• settledBlockFi's Chapter 11 bankruptcy case was closed on October 24, 2024.¹³

Where the founders are now

Zac Prince was the CEO of BlockFi.¹³ Flori Marquez was the SVP of Operations and later Co-Founder and Chief Operating Officer.¹³¹⁸ Mahesh Paolini-Subramanya was the CTO of BlockFi.¹⁸

Sources

2. Business Report: Jersey City-based BlockFi files for bankruptcy | NJ Spotlight News, NJ Spotlight News
3. Crypto lender BlockFi cleared to repay customers through liquidation plan, The Business Times, 2023-09-27
6. Major crypto company shuts down, refunds investors, finance.yahoo.com, Jan 26, 20
7. Exchange Outflows, BlockFi Bankruptcy Analysis, & Miner Capitulation, thebitcoinlayer.substack.com, 3 years ag
8. States object to BlockFi's interest-bearing account, American Banker, 2021-07-28
9. Startups That Failed Due to Regulatory and Compliance Issues, chierhu.medium.com
12. BlockFi Revenue, Valuation, Funding & Investors | Multiples, multiples.vc, 5 days ago
13. BlockFi IPO Timeline and Financing Details - Forge, forgeglobal.com
15. BlockFi raises $30M Series B, pomp.substack.com, 6 years ag
16. Crypto Lender BlockFi Now Valued at $3B After $350M ..., builtinnyc.com, Mar 11, 20
18. BlockFi: Funding, Team & Investors, Startup Intros

How this case file was put together

Every statement on this page carries a numbered note, and every note points to a court record, a regulatory filing or a named publication in the list of sources. Each statement was checked against the text of the sources it cites before it was published: a figure, a date or a name the cited source does not contain was cut rather than kept. Allegations are shown as allegations, with their status at the time of the source (filed, charged, convicted, pleaded, settled, dismissed or pending). Quoted lessons are the words of the person or publication named with them, copied from the cited source; nothing here is our own opinion of why the company failed.

If a fact on this page is wrong, use "Report an error" below and attach the record that shows the correct fact. Every report is reviewed by a person before anything changes, and a corrected page says when it was last corrected.

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