Holy Smokes, it's Cyber Monday and Block Fine. Just filed for Chapter 11 bankruptcy. In this video, you're going to see how much cash they actually have on hand, why they suggest that they're going bankrupt and oh my. Lordi The insanity of a lesson that is not your keys, not your crypto. Something we've been talking about for years on this channel. But boy, this really puts the nail in the coffin of trying to farm yields on exchanges. And it comes after the FTX collapse. Let's Talk About It By starting with some of these tweets, but first today in honor of Cyber Monday, yes, we have a Cyber Monday coupon code that is exclusive for this holiday. Make sure you take advantage of that coupon code. Join the lifetime access to the programs on building your wealth especially with the Elite Hustlers Course Now live and new lectures coming to the Sox and Psychology of Money and Real Estate Investing courses totally for free soon! Stay tuned here in December Well December's in a few days. So in December for those new lectures to drop in, the next batch of the Elite Hustlers lectures to come out I'm very very excited. Okay, take a look at this: blocked by 11 hours ago, withdrawals will remain fully operational. This was on November 10th at 5 37 PM So 11 hours ago Block Phi withdrawals will remain fully operational. Block Fight 20 minutes ago pausing withdrawals Can't do business again anymore. It's like you can't trust what these companies are saying. This is why for a week to two weeks prior to Block Fight going bankrupt I've been screaming on the channel and on Twitter Get off the exchanges. Hopefully you were able to heed that advice because the same thing is what happened at FTX That's why I wrote this is why trusting institutions is tough Sam Bankman Freed says everything fun, everything's fine and then all of a sudden they're going bankrupt. And what was really frustrating is they actually froze with withdrawals. But then they sent out an email saying dear Valued card holder because I actually had a Block Fight credit card except it was zero balance. In light of the recent developments with Block Fight, we'd like to provide a friendly reminder that all terms and conditions of your cardholder agreement continue to apply. In other words, you need to continue making payments to your credit card. otherwise they'll report you to the credit bureaus. They literally threaten you here. Your repayment activity and account status will continue to be reported to the credit bureaus. So in other words, if you don't pay your bill even though we're going, you know, basically bankrupt here and freezing withdrawals, you have to keep paying your bill. which was crazy. And now now folks, it is official. Today is November 28th it's Cyber Monday and Block Fine has filed for Chapter 11 Bankruptcy Protection which is usually a way the company says, hey, we want to reorganize, We're not going to liquidate, we want to reorganize, but we are going bankrupt. And because we're going bankrupt. we probably are going to be in a situation where shareholders like Equity investors get wiped out. But maybe our company gets bought out or merged for some form of a discount with another company and that company might say hey, look, we'll take all your accounts and and all your users, but we'll only pay you 10 cents on the dollar for everything that's there. And it sucks because exchanges like this don't usually have what's known as Sipc insurance. Uh, now if let's say you're investing in stocks through TD Ameritrade as an example, they usually have a protection of loss of 500 000 per account now verifying the terms and conditions obviously on all the trading websites that you use. but that means that the company goes bankrupt and you have more than 500 000 invested through their platform. At least you have some way of getting up to 500k back. But with these crypto companies, they don't have Sipc insurance because obviously crypto hasn't matured to that level of Regulation and protection yet. This disaster will hopefully lead to those sorts of protections. but this is wild. Look at what this statement says here. It says that Blockify has 256 million dollars of cash on hand, which they say is sufficient liquidity for operating expenses. But this is the scary part. All right. watch this. We're gonna go jump on over to the actual bankruptcy filing. Remember, they've got one quarter of a million dollars available. 256 million dollars. Kind of like an old crappy 256k modem. Okay, they got 200. All right, a 256 million dollars on hand. But look at this. Okay, current liabilities are estimated to be a billion to 10 billion dollars. Now they do say they think they have Assets in around that range, but assets could be illiquid or they could be worthless. Uh, you know, once you actually mark them to Market So I think really, all you can expect that they have is 256 million dollars. But they have liabilities in excess of one billion dollars up to 10 billion dollars. And I hate to say this, but look at this folks. when you look at the attachments. the people getting rich here are the attorneys. Look at this one Attorney right here had a retainer. They've already been paid 1.9 million dollars and now they have a retainer of 750 000 dollars. And here's another attorney. Prior to this filing I have received 1.47 million dollars with a retainer of two million dollars. Uh, and then that's it's. actually those two law firms here. but this process just gets started. A retainer doesn't mean that's all of the money, right? or all of the charges that are going to happen. I Think that 256 million dollars gets whittled away on corporate salaries and attorneys as they go through a bankruptcy proceeding which could take anywhere from six months to two years. And they just Whittle away that 256 mil to where this probably very very little cash left over actually at the end. Now, what reason do they give for this collapse? Well, they gave us a little FAQ section which doesn't make any of this any better. So this is a Chapter 11 filing with the District of, uh, the Bankruptcy Court for the District of nor New Jersey They are trying to maximize value for all stakeholders. They think they'll have over a hundred thousand creditors. and they say here does Blockify hold 100 of client deposits on FTX They say that the rumor is that a majority of Blockify assets are held on FTX are false. Okay, well, that's it's. important to know that even though the majority might not be there, it's possible that the way they've written this up to 49 of assets that Blockify has could actually be held on FTX. However, as shared, we do have significant exposure to FTX and the associated corporate entities that Encompass obligations owed to us by Alameda In other words: Alamina Sam Bankman fraud I mean sandbankment Freed's company, his investment company owes money to Block Five and they do hold assets at Ftx.com and they have a credit line with Ftx.us but they don't have access to that credit line anymore. In other words, now they have no credit line and potentially up to 49 of their assets are gone thanks to FTX and Alameda owes them a bunch of money. And even though that loan is considered an asset, going back to sort of that asset argument right, Alameda's loan to blockify could be uh or sorry the other way around. uh, blockifies loan to Alameda could be a two billion dollar loan Blockfi may have said, hey, we're gonna give you two billion dollars Alameda because you're promising to pay us 10 because you all are a fraud and we're gonna go pay our customers seven percent on their Block Five deposits, right? That's just an example. And then Block Five Pockets The difference: Blockfi has that massive exposure uh to Alameda And now technically, if the number is two billion dollars to Alameda let's say technically that is an asset. So when you look over here her and you're like, well, wait a minute. Kevin On the uh, liabilities and assets section, it says that they have assets of one to ten billion dollars. Yes, But again, that estimated asset uh oh, that that Alameda owes block fighting money could be worth zero, could be worth zero dollars. That's why you could really only go with the cash they have. in my opinion, 256 million dollars. But the problem is that'll get whittled away. So they say here we're shocked by the news regarding FTX and Alameda Uh, We, like the rest of the world, found out about the situation through Twitter that's you couldn't even get a text message from Sam making free What does this mean for clients They say here. Acting in the best interest of our clients is our top priority and continues to guide our path forward. We will communicate with our clients through the process to ensure they hear from us directly. We are not requesting authority to restore platform activity at this time. In other words, if you have money on Block Fight, it's stuck on there for a while and it's basically subject to the Chapter 11 process. They encourage you to maintain your Blockfly app and account at this time and withdrawals from Block Fight continue to be paused so can't get your money out if you have Auto deposit. Stop putting your money in I Definitely recommend not put your money in anymore. In fact, I mentioned before, block find and FTX collapsed multiple times. Make sure to get off exchanges. I even closed my blogfi credit card about a month ago and these are things we've talked about not only on Twitter but on YouTube about getting off exchanges. Uh, well. actually we've been talking about that for years, but I'm so devastated by this is so terrible. But anyway, let's see what else we have here at this time. Withdrawals continue to be paused. When will Blockify complete the restructuring process promptly as possible. The ultimate timing may vary I would say six months to two years. How do you keep informed? They've got a link to the attorney's website where you can get the filings. What does this mean for retail loans? So this is potentially a good thing right here. At this time, you can see this here at the bottom. At this time, clients do not have the ability to post new funds at Blockfi. As a result, we have put your loan into forbearance. Finally. So, even though they sent out that email about credit cards and Loans it looks like everything's in forbearance. Any amounts due including interest and maturity payments are placed on hold. Until further notice, the interest rate on your loan will be set to Zero from November 11 2022 onwards, and clients will not be charged additional interest. Or when a loan enters delinquency after November 11th, your loan will not be reported as delinquent. Two Credit Bureaus You will not be expected to make payments at maturity while your loan is on hold and there will be no late fees associated Seed: Should you have questions, hit us up at Blockfi.com Contact: What if my retail loan is showing as delinquent for Us-based customers? Loan Servicing Provider Scratch will show your loan is delinquent in their system, but given the zero percent interest, your loan will not accrue any interest. Relate penalties. your loan will not be reported as delinquent to credit bureaus is Block File liquidating retail loans if the loan reaches a liquidation or loan to value If the loan reaches liquidation, Loan to Value While platform activities are paused, in other words, are you going to get margin called? If Bitcoin continues to fall at this time, clients do not have the ability to post new funds to block Fi as a result. No. Basically, they're pausing Margin Call Requirements now block files or I should say Bitcoin is actually relatively stable after this. mostly because this Block 5 bankruptcy was anticipated. We saw the writing on the wall for this. We just now finally have some of the details of it and that cash on hand is pretty dang disgustingly low. So pretty terrible situation. This sucks. Huge lesson in staying away from companies that are not Sipc insured and not your keys. not your crypto happy Cyber Monday Everyone thanks so much for watching and we'll see in the next one. Goodbye.