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Bankrupt cryptocurrency lender BlockFi plans to liquidate its cryptocurrency lending platform after concluding that selling the business to a new owner wouldn’t generate enough value for its creditors, WSJ Pro Bankruptcy reported. Jersey City, N.J.-based BlockFi outlined its chapter 11 plan of reorganization, which will be sent to creditors — including more than 100,000 retail customers — for a vote, in a document filed Friday with U.S. Bankruptcy Court in Trenton, N.J. The company said that after having engaged with potential buyers to solicit a sale of its digital-assets platform and about 660,000 client accounts since January, it concluded that a sale might not generate meaningful value for creditors. The company cited recent regulatory developments as one reason that it didn’t receive value-maximizing offers from prospective buyers. BlockFi said how much clients will recover largely depends on the outcome of pending litigation against its commercial counterparties, including crypto exchange FTX and trading firm Alameda Research, both founded by Sam Bankman-Fried, as well as cryptocurrency hedge fund Three Arrows Capital and crypto miner Core Scientific. The success or failure of these lawsuits “will make a difference in excess of $1 billion to clients,” BlockFi said in the filing.

Austin-based startup accelerator Newchip announced May 12 it is shutting down, the Austin Business Journal reported. "It's with a heavy heart that I announce the closure of Newchip today,” founder and CEO Andrew Ryan posted to LinkedIn, along with a lengthy explanation. The company, legally known as AstraLabs Inc., has been dealing with a chapter 11 reorganization case that started on March 17. On May 12, a bankruptcy judge ordered the case to be converted into a chapter 7 business liquidation. A meeting of creditors has been set for June 16. The Austin-based company was founded in 2016 by Ryan, Nihar Patel and Travis Brodeen and has operated a virtual incubator and accelerator to help early-stage founders grow their businesses. Newchip raised $7.9 million across several rounds of venture funding, including a $250,000 round in February this year, according to Crunchbase. Despite its history of connecting entrepreneurs with startup capital — Newchip's website boasts that it works with investors at Elevate Capital, DreamIt and others — the accelerator's finances have fallen into disarray, according to a May 10 motion from Shane Tobin on behalf of Eric Terry, the U.S. Trustee assigned to the case. The document states the company doesn’t have enough money on hand to cover its next payroll on May 15 or its other expenses.

BlockFi Inc. customers who tried to reclaim nearly $300 million in crypto after the company froze transfers last year don’t have a right to the digital assets, a judge ruled, handing potential losses to investors who held interest-bearing accounts, Bloomberg News reported. Bankruptcy Judge Michael Kaplan sided with the company and dismissed the objections of a group of customers, who argued that they retained rights to the coins even before they were moved into a secure digital wallet. Those who kept their assets in interest-bearing accounts gave up certain ownership rights, while those in custodial accounts did not. To protect themselves around the time of the freeze, users rushed to move coins into the safer digital wallets. BlockFi, which is based in Jersey City, filed for bankruptcy in November with plans to either sell or reorganize its business to repay creditors. The ruling is similar to those made in other crypto-company bankruptcies. A federal judge in New York ruled that Celsius Network owns the coins that users placed in interest-bearing accounts. Judge Kaplan found that BlockFi stopped all transfers on Nov. 10 at 8:15 p.m. Some customers tried to move their assets to safer custodial wallets afterward and got messages on the company’s app saying their transfers were complete — but those notices were wrong, Judge Kaplan ruled during a short court hearing yesterday.

Deposit withdrawals from U.S. banks following the collapse of Silicon Valley Bank were concentrated in around 30 "super-regional" institutions in the $50 billion to $250 billion range, similar to SVB, New York Fed researchers concluded in a newly released study, Reuters reported. Deposits among thousands of "community and smaller regional banks ... were relatively stable by comparison" during March, the researchers found, with the largest, most systemically important firms receiving the deposits that left the super-regional group. Though there were concerns about a broader run on bank deposits after the failure of SVB on March 10 and Signature Bank on March 12, the NY Fed study points to what Fed officials themselves seemed to conclude early on: that the problems were focused in a discrete set of institutions. There were fears that banking sector weaknesses might touch off a wave of mergers that would wipe out smaller institutions - to the potential detriment, for example, of small business lending.

Vyera Pharmaceuticals, the company that Martin Shkreli founded and used to conduct a securities fraud that landed him in prison, filed for bankruptcy yesterday, the Wall Street Journal reported. Vyera, its Swiss parent company Phoenixus and several affiliates filed for protection in the U.S. Bankruptcy Court in Wilmington, Del., after the reputational harm from Shkreli’s fraud hampered them from opening bank accounts, commercializing products or raising capital, court papers say. Shkreli founded the companies in 2014, originally under the name Turing Pharmaceuticals, focusing his efforts on acquiring drugs that were the only viable option for patients afflicted with rare life-threatening diseases, and then raising prices. He was arrested in 2015 and convicted of federal securities fraud in 2017, and began serving a federal prison sentence that year. But he continued with his business strategy from prison, conducting his operations by giving orders to directors and officers he appointed using a contraband cellphone. In 2020, the Federal Trade Commission and a number of state attorneys general sued Shkreli, Vyera and Phoenixus for alleged antitrust violations. Following the FTC complaint, the business appointed a new board and management team, which took steps to eliminate Shkreli’s influence, according to court papers filed Wednesday by their chief restructuring officer, Lawrence Perkins.

The U.S. Internal Revenue Service (IRS) has filed claims worth nearly $44 billion against the estate of bankrupt crypto exchange FTX and its affiliated entities, CoinDesk.com reported. According to bankruptcy filings dated April 27 and 28, the IRS put forth 45 claims against FTX companies, which include West Realm Shires (the legal entity of FTX.US), Ledger Holdings (the parent company of LedgerX and LedgerPrime) and Blockfolio, among others. The largest of the claims includes $20.4 billion and $7.9 billion claims against Alameda Research LLC and two claims totaling $9.5 billion against Alameda Research Holdings Inc. The claims are filed under the classification “Admin Priority,” which could allow the IRS’s claims to take precedence over the claims of other creditors in a bankruptcy case. Bankruptcy documents detailing the $20.4 billion claim against Alameda Research LLC reveal that the IRS is claiming about $20 billion in partnership taxes. The remaining amount of the claim includes millions in withheld income taxes and payroll taxes.