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Happy Friday!
On Sunday, crypto trading and lending firm BlockFills filed for bankruptcy via its parent company, Reliz Technology Group.
The bankruptcy conjured memories of 2022’s cascading blowups and bankruptcies. And in fact, we can draw a line from last cycle to Sunday’s filing to explain how BlockFills found itself in this predicament. That’s the subject of today’s feature article.
Plus, Kraken punts on its IPO plans (for now), Hive exits Sweden, and the latest pods from Blockspace!
(P.S. we are only 4 weeks away from OPNEXT at the NY Times Center in New York, New York! We only have room for 50 more attendees, so snag a ticket now using code PODCAST for 20% off).
Hedge funds are getting liquidated. Is your BTC safe?
It’s not just Bitcoin price drying up. Big whales, hedge funds, and lending desks are going under after the notorious 10/10 and 2/5 liquidations.
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Everything you need to know about the BlockFills bankruptcy
Last Sunday, BlockFills – a crypto financial services company that originates crypto-backed loans – filed for Chapter 11 bankruptcy via its parent company, Reliz Technology Group Holdings.
While not exactly a titan of crypto lending, BlockFills was “one of the more quiet behemoths” of the trade, as Lygos Co-founder Francis Corvino put it on a recent Blockspace Podcast. The company claims to have brokered $61 billion in trading volume last year, and its cap table includes investing stalwarts like Susquehanna and CME Ventures, the company’s Chapter 11 filing reveals.
Per the company’s bankruptcy documents, its unsecured creditors have $145 million at stake in the case. These unsecured claims include customer liabilities to Coinmint Co-founder Ahston Soniat ($5.65 million), Bitfarms (NASDAQ: BITF) subsidiary Backbone Hosting Solutions ($4.22 million), and Simple Mining ($3.73 million). They also include a “trades payable” debt of $1.26 million to the Chicago Blackhawks hockey team, ostensibly for unpaid services related to Blackhawks games. (Representatives for the Blackhawks and Bitfarms did not return Blockspace’s request for comment).
The bankruptcy calls to mind the failures of BlockFi and Celsius in 2022. With the toppling of either crypto lender came a chain of cascading insolvencies that would jeopardize many crypto companies, including Core Scientific.
More than calling these failures to mind, we can actually trace BlockFills’ failure to 2022 and as far back as 2020, shaken by similar tremors that toppled its peers.
So far, it doesn’t seem like BlockFill’s bankruptcy will lead to any systemic contagion within the Bitcoin industry, with Corvino calling the insolvency a “small avalanche” that is “probably going to be an isolated event.”
Still, the case provides a playbook for how old financial wounds can fester and become terminal several years later.
In the News
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Blockspace
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On the latest Blockspace Podcast, Francis Corvino, of Lygos Finance joins us to talk about the Blockfills bankruptcy filing, their $145M in unsecured claims, and why the 2022 "hangover" is still claiming victims today. We also dive into Kraken’s decision to delay its public offering, the SEC’s long-awaited guidance on token offerings, and the meteoric rise of Circle’s stock following Clarity Act talks. Finally, we warn you about the sophisticated Lazarus Group phishing campaign that hit Bitrefill and targeted seasoned developers.
Did you know that beavers can’t burp? Like most rodents, they have a weak diaphragm, a stomach structure that prevents the upward movement of gas, and lack the neurological pathways to trigger a burping reflex.
-CMH