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It has been a brutal season for the crypto market with the ongoing bearish cycle and shutdowns and layoffs at multiple enterprises.
Bit.com, a popular crypto exchange, and DappRadar, a prominent decentralized application (dApp) analytics platform, announced they are shutting down.
Then, the OKX crypto exchange and Polygon Labs decided to cut staff as part of global restructuring.
Now, it has come to light that a major crypto firm has filed for Chapter 11 bankruptcy.
Archblock files for Chapter 11 bankruptcy
TrustToken was founded in 2017 and the venture launched the TrueUSD (TUSD) stablecoin in 2018 and the TrueFi uncollateralized lending protocol in 2020.
In 2022, TrustToken rebranded to Archblock LLC as the San-Francisco company transitioned from a stablecoin venture into a crypto company focused on bringing institutional capital and traditional asset management into decentralized finance (DeFi).
On Feb. 6, Archblock filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware as it reported more than $100 million in liabilities against barely $10 million in assets.
Chapter 11 bankruptcy is a legal process under U.S. law that lets a person or business that can’t pay its debts reorganize instead of shutting down. The main idea is to give the company time and structure to fix its finances while still operating.
Archblock's bankruptcy filing mentions six debtor entities:
The filing mentions Alameda Research as a potential creditor with an unsecured claim of $8.5 million.
Founded by bankrupt crypto exchange FTX's jailed founder Sam Bankman-Fried in 2017, Alameda Research was a crypto trading firm on paper but operated like a hedge fund in practice. FTX was found to be channeling customer funds to its senior executives by pooling money via Alameda Research.
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The Archblock bankruptcy filing also mentions the bankrupt crypto lender Celsius Network as a "stablecoin holder/unliquidated creditor in a dispute."
As reported earlier, Celsius sued Archblock in October last year for orchestrating an alleged “multimillion-dollar fraud.” The lawsuit claimed that Archblock and its subsidiaries, TrustToken Inc. and TrueCoin LLC, falsely represented their TrueCurrency tokens as fully collateralized and backed by cash held in escrow but funneled customer funds into speculative and volatile offshore investments.
As per the suit, Celsius minted more than $14 million worth of TrueCurrency assets, including TrueAUD, TrueCAD, and TrueGBP, between 2019 and 2022.
But when Celsius tried redeeming around $12.9 million in holdings in 2023 during the bankruptcy process, Archblock allegedly refused and claimed a loss of access to reserves after escrow partners Prime Trust LLC and First Digital Trust collapsed.
The total crypto market cap stood at $2.35 trillion at the time of writing, down 25% in a month.
This article has been published in thestreet.com via Yahoo News.
Major crypto firm files for Chapter 11 bankruptcy
It has been a brutal season for the crypto market with the ongoing bearish cycle and shutdowns and layoffs at multiple enterprises. Bit.com, a popular crypto exchange, and DappRadar, a prominent decentralized application (dApp) analytics platform, announced they are shutting down. ...
finance.yahoo.com
