Ripple Counsel Calls Out SEC Over BlockFi Bankruptcy

BlockFi, a cryptocurrency lender has become another firm to fall due to the FTX collapse. BlockFi filed for chapter 11 bankruptcy protection due to extensive exposure to the defunct crypto exchange. However, Ripple General Counsel has allegedly blamed the U.S. SEC for these circumstances.

Ripple counsel questions SEC involvement

Stuart Alderoty, Ripple General Counsel mentioned BlockFi bankruptcy filing and called it another SEC “Regulation by enforcement” success story. Earlier, he raised questions about the SEC settlement and FTX-BlockFi consumer fund connection.

He stated that this bankruptcy filing comes after a $100 million BlockFi and SEC deal. While there is a $275 million loan outstanding to FTX from BlockFi. However, there are still unknown amounts owed to BlockFi from FTX.

Alderoty highlighted that nothing was ever registered while there are still questions about the fine paid in the deal. If paid then whose money was used to pay for the settlement?

Coingape reported that Ripple General Counsel inquired about the first two payments around the $100 million fine initiated by the SEC. However, question the commission to show BlockFi ability to pay for the settlement.

BlockFi Creditors Exceed 100K

However, the bankruptcy filing in a New Jersey court comes amid the downfall of the crypto market. Bitcoin price has dropped by more than 70% from its all time high (ATH). Experts highlight that BlockFi’s Chapter 11 restructuring underlines the risk related to the crypto market.

As per reports, BlockFi’s creditors exceed 100k while its asset and liabilities are between $1 billion to $10 billion. Ankura, a Trust Company is its largest creditor which owes over $729 million. The same company is the trustee of BlockFi’s interest account.

The crypto lending platform mentioned that the liquidity crisis happened due to its exposure to the FTX through loans to Alameda. In a separate filing, BlockFi stated that it is planning to lay off the majority of its 292 employees.