• BlockFi filed for Chapter 11 protection Monday
  • BlockFi, in a court hearing in Trenton, New Jersey, detailed the money owed to it by FTX
  • BlockFi has around 100,000 creditors and around $257 million cash in hand

Crypto lender BlockFi which filed for bankruptcy protection earlier this week, has confirmed that FTX and Alameda Research owe the company over $1 billion and noted that "the Luna collapse really was the start of everything."

BlockFi is the first direct casualty of the controversial centralized crypto derivatives exchange FTX. After filing for Chapter 11 protection Monday, citing the colossal collapse of FTX and crypto market volatility, Kirkland & Ellis partner Joshua Sussberg, the lawyer for the crypto lender, attended a court hearing Tuesday.

"The Luna collapse really was the start of everything," Sussberg said to the court while showing a slide deck. The presentation revealed that the LUNA collapse in May and the subsequent defaults and insolvencies of firms like Celsius Network, Three Arrows Capital, Voyager, Core Scientific and FTX led BlockFi to the quagmire that it is currently in.

BlockFi, in the court hearing in Trenton, New Jersey, detailed the money owed to it by FTX. It was disclosed that FTX and Alameda Research, both founded by Sam Bankman-Fried, owed the crypto lender more than $1 billion.

This includes the $671 million now-defaulted loan to Alameda Research and $355 million in frozen funds to FTX. On its first day of filing, the crypto lender detailed that it had around somewhere between $1 billion and $10 billion in total assets and liabilities somewhere between $1 billion and $10 billion.

BlockFi has around 100,000 creditors and around $257 million cash in hand, some of which was due to crypto holdings liquidation. Susberg, during the hearing, sought the court's approval to let the company's customers withdraw their funds.

"We intend, Your Honor, as we noted in the pleadings, to quickly file a motion to allow customers to withdraw from their personal wallet to the extent they so wish because we do not believe that is property of the estate," the lawyer said, noting, "If it's in your wallet, it stays in your wallet."

He also addressed the issue of various BlockFi entities transacting with one another, noting that the legal team has examined the governance structure to "deal with the review and investigation of any claims related to the FTX transaction."

During the Tuesday hearing, U.S. Bankruptcy Judge Michael Kaplan authorized BlockFi to continue paying its employees and maintain its bank accounts. He also approved the crypto lender to do the needed measures to carry on with its day-to-day operations while the bankruptcy case is ongoing.

Illustration shows BlockFi logo