BlockFi Desperate To Cling To Experts As Bankruptcy Process Rumbles On

Updated: 24 January 2023

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BlockFi is planning to retain as much talent as possible even as the lender continues with the bankruptcy process. The Chief People Officer at BlockFi, Megan Cromwell, said that the crypto lender risked losing more talent unless the court approved a retention petition filed on November 28, 2022.

BlockFi desperate to cling to experts

In a filing on January 23, 2022, Cromwell said it was prudent for the lender to support dialogue between the Committee and the US Trustee. He noted that the crypto lender had experienced a loss in personnel, and there was growing concern about the retention payments.

However, this filing has been opposed by the creditors’ Committee and the US Trustee. BlockFi was among the companies affected by the fall of Sam Bankman Fried’s empire, which comprised FTX and Alameda.

The FTX bankruptcy estate recently opposed a request made by BlockFi to access the Robinhood shares owned by Bankman-Fried. These shares were pledged as collateral for a loan issued by the lender to Alameda Research. Bankman-Fried, BlockFi, and FTX are contesting the ownership of these shares. The US Department of Justice has also commenced the process of seizing the shares.

Celsius also wants to retain top talent

Another bankrupt crypto lender, Celsius, is also looking to retain top talent as it continues with the bankruptcy proceedings. Celsius filed for bankruptcy in mid-2022 after the collapse of the Terra Luna ecosystem. The lender gained approval to pay the personnel assisting with the bankruptcy process.

Like BlockFi, Celsius is also looking for retention payments for some employees. The lender wants to retain employees that earn between $25,000 and $425,000. Celsius has lost multiple employees since the bankruptcy filing. Around 200 employees have left the company.

Crypto firms that have filed for bankruptcy are currently under scrutiny over their retention schemes. These schemes seek to continue making payments to certain employees. However, they end up draining the critical liquidity needed to sustain operations.

The FTX exchange is also under scrutiny over how it uses much-needed funds to retain employees. The current FTX CEO, John Jay Ray III, receives a hefty fee for his role in the exchange’s bankruptcy proceedings. The community argues that these funds could be challenged into reimbursing the users of the exchanges affected by the bankruptcy.

The FTX exchange is believed to owe creditors more than $8 billion. FTX advisors recently revealed that they had located $5 billion worth of liquid assets comprising cash, cryptocurrencies, and investment securities.

The retention plans by bankrupt crypto companies come amid plans by other companies to lay off employees to remain solvent. Coinbase and Crypto.com recently announced additional layoffs. The Gemini exchange is the latest to announce layoffs. The exchange revealed plans to trim its workforce by 10%. The Gemini exchange has been affected by the bankruptcy of crypto lender Genesis. Around 340,000 Gemini Earn users have been impacted by Genesis’ bankruptcy.

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