However, the court has objected to the BlockFi request noting that every penny used to pay employees denies the creditors their right to be reimbursed.
Distressed cryptocurrency lender BlockFi has filed with the bankruptcy court in the District of New Jersey wanting to get bonuses approval for retaining experienced employees. According to the court filings, BlockFi wants to hold on to experienced employees who are constantly getting higher-paying job opportunities with other companies like Google, and Walmart.
Notably, BlockFi filed for chapter 11 bankruptcy protection after it reported huge exposure to the collapsed cryptocurrency exchange FTX and Alameda late last year.
However, the company filed with the Bankruptcy Court a series of customary motions to allow it to continue to operate its business. Moreover, BlockFi reported a cash balance of approximately $256.9 million to help in the restructuring process. According to the company, it intended to retain some employees to help it through the restructuring process and run the daily operations.
“The labour market for employees who possess the qualifications and skills necessary to operate a sophisticated cryptocurrency trading platform is highly competitive. The war for talent remains active, and the Participants have many opportunities inside and outside the cryptocurrency sector,” Chief People Officer Megan Crowell said in a January 23 filing with the Bankruptcy Court.
However, the court has objected to the BlockFi request noting that every penny used to pay employees denies the creditors their right to be reimbursed.
“The Committee does not object, in principle, to the Retention Programs,” it said. “The Committee understands the need for certain key employees to be incentivized to stay on to aid the restructuring effort and preserve value. But every unnecessary dollar paid from these Programs diminishes distributions to creditors.”
BlockFi and Crypto Woes
Before filing for bankruptcy protection, BlockFi was at loggerheads with regulators in the United States for offering unregulated services. Last year, BlockFi agreed to pay a $100 million penalty to the SEC for offering unregistered offers and lending products. Mid-last year, FTX agreed to purchase BlockFi for a whopping $250 million after the lender reported heavy losses incurred during the crypto crash.
Founded in 2017, the company marketed its products as a bridge between digital assets and traditional financial and wealth management products. However, BlockFi’s collapse has reduced crypto cash inflows both from retail and institutional investors in the past few months.
Nonetheless, Bitcoin and Ethereum prices have significantly recovered FTX incurred losses in the past three weeks. According to our latest crypto price oracles, Bitcoin price is exchanging around $23k on Tuesday.
On the other hand, Ethereum (ETH) is exchanging at around $1,638.17, up over 24 percent in the past two weeks. The total crypto market capitalization has reclaimed $1 trillion after going below $800 billion in the past few months.
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