Key Takeaways
- • BlockFi filed for Chapter 11 bankruptcy on November 28, 2022, becoming the latest casualty of FTX's fraud, with customers owed $729 million as the company's largest creditors.
- • Peter Thiel's Valar Ventures owns 19% of BlockFi, a stake now rendered essentially worthless under bankruptcy law where shareholders rank last in the creditor hierarchy, behind both secured and unsecured creditors.
- • Thiel suffered compounded losses in November 2022: his BlockFi equity stake collapsed while his political investments faltered, with Arizona Senate candidate Blake Masters—Thiel's anointed candidate and protégé—losing a winnable race, and an Ohio Senate candidate barely winning what should have been a decisive victory.
- • Thiel remains one of crypto's most influential advocates, intellectually architecting a dystopian vision of Bitcoin as a survival currency amid systemic financial and political collapse, though his recent setbacks diminish his political and financial leverage in the sector.
Summary
BlockFi's Chapter 11 filing on November 28, 2022, marked another significant casualty in the cryptocurrency sector's autumn collapse, with the troubled lending platform owing customers $729 million—the company's largest creditor category. The bankruptcy filing carried particular significance for billionaire venture capitalist Peter Thiel, whose firm Valar Ventures controls a 19% equity stake in BlockFi. Under bankruptcy law's creditor hierarchy, equity holders occupy the final position, meaning Thiel's shares are now effectively worthless as the company liquidates assets to satisfy secured and unsecured creditors first.
BlockFi's failure represents the second major setback for Thiel in November alone. Beyond the financial loss from his BlockFi investment, Thiel's political capital suffered substantial erosion following the midterm election results. Blake Masters, the Arizona Senate candidate whom Thiel anointed and supported alongside Donald Trump, lost a race considered winnable for Republicans. Simultaneously, another Thiel-backed candidate in Ohio's Senate race barely secured victory in what should have been a commanding win. These dual defeats underscore the deterioration of Thiel's influence across both financial and political spheres during a single month.
Thiel's position within the cryptocurrency ecosystem carries outsized weight given his prominence as one of the industry's wealthiest and most intellectually influential advocates. He and his network of protégés have articulated a distinctly darker vision of Bitcoin's utility—one rooted in systemic pessimism where cryptocurrency serves as a hedge against the collapse of traditional financial and political institutions. In this worldview, Bitcoin functions as a survival currency when existing systems fail. This ideological framework, coupled with Thiel's substantial resources and political network, has positioned him and his associates as architects shaping cryptocurrency's intellectual and investment direction. However, the convergence of BlockFi's bankruptcy and his political losses in November 2022 substantially diminishes both his financial capital and his political leverage to advance this vision.
BlockFi's failure represents the second major setback for Thiel in November alone. Beyond the financial loss from his BlockFi investment, Thiel's political capital suffered substantial erosion following the midterm election results. Blake Masters, the Arizona Senate candidate whom Thiel anointed and supported alongside Donald Trump, lost a race considered winnable for Republicans. Simultaneously, another Thiel-backed candidate in Ohio's Senate race barely secured victory in what should have been a commanding win. These dual defeats underscore the deterioration of Thiel's influence across both financial and political spheres during a single month.
Thiel's position within the cryptocurrency ecosystem carries outsized weight given his prominence as one of the industry's wealthiest and most intellectually influential advocates. He and his network of protégés have articulated a distinctly darker vision of Bitcoin's utility—one rooted in systemic pessimism where cryptocurrency serves as a hedge against the collapse of traditional financial and political institutions. In this worldview, Bitcoin functions as a survival currency when existing systems fail. This ideological framework, coupled with Thiel's substantial resources and political network, has positioned him and his associates as architects shaping cryptocurrency's intellectual and investment direction. However, the convergence of BlockFi's bankruptcy and his political losses in November 2022 substantially diminishes both his financial capital and his political leverage to advance this vision.
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