BlockFi Sues Bankman-Fried Entity to Recover Collateral After Bankruptcy - Filing

WASHINGTON (Sputnik) - Cryptocurrency firm BlockFi is suing an entity tied to the head of fellow cryptocurrency player FTX, Sam Bankman-Fried, in an attempt to recover collateral the company says it is owed, according to a court document filed in the US Bankruptcy Court for the District of New Jersey.

BlockFi filed a suit against Bankman-Fried’s Emergent Fidelity Technologies demanding he give them an unspecified amount of collateral they claim belong to the company.

The suit seeks an order from the court directing Emergent to immediately transfer the collateral to a neutral party, and ultimately BlockFi, the filing said.

The filing came hours after the crypto lender followed in FTX's steps and filed for bankruptcy after the recent collapse of cryptocurrency prices. The Chapter 11 filing effectively gives BlockFi creditors assurances it will have a better chance to arrange a repayment plan.

Reports have indicated that BlockFi's top 10 creditors are owed some $1.2 billion.

Earlier this month, Bankman-Fried’s cryptocurrency business filed for bankruptcy after competitor Binance backed out of plans to acquire it.

Neither individual nor institutional investors are expected to get anything back from FTX’s bankruptcy proceedings, Gary Korolev, CEO of financial services firm Sovereign Wealth Management, told Sputnik.