The most recent cryptocurrency company to file for bankruptcy is BlockFi, which followed the collapse of Sam Bankman-crypto Fried’s empire.
Another business infected by the FTX virus
The FTX virus has recently claimed another cryptocurrency company. BlockFi will reportedly file for Chapter 11 bankruptcy protection later today, according to a crypto news source. According to the insider, a significant portion of the staff at the cryptocurrency lender is also being let go.
BlockFi, a platform that offered customers a reward for holding new cryptocurrencies, originally disabled withdrawals on November 11, the same day FTX filed for bankruptcy. In response to this, BlockFi wrote in a letter, “We discovered about this occurrence through Twitter, just like the rest of the world. We are horrified and appalled by the news involving FTX and Alameda.”
Decrypt was informed by a company source that, about a week later, the company was considering filing for bankruptcy because to its huge exposure to FTX.
As FTX contagion spreads, predictions of BlockFi’s insolvency increase.
BlockFi recently restricted customer deposit withdrawals after admitting to having “substantial exposure” to the now-defunct exchange FTX and the related trading firm Alameda Research. Following the failure of Sam Bankman-FTX Fried’s exchange, the crypto lender allegedly planned to file for bankruptcy.
According to Decrypt, a cryptocurrency media outlet, BlockFi, and Binance have discussed potential financial assistance. BlockFi sent an email to its customers reassuring them that the majority of its assets are still held on the troubled FTX exchange. However, the cryptocurrency lender admitted to having “substantial exposure” to the exchange. Many cryptocurrency firms have suffered as a result of FTX’s collapse.
BlockFi declared that it was incorrect that FTX was where the majority of its assets were kept.
Nevertheless, the statement said, “We do have significant exposure to FTX and connected corporate entities, including payments due to us from Alameda, assets stored at FTX.com, and unused portions of our credit line with FTX US.
Also mentioned in the email was the fact that the cryptocurrency lender has “employed skilled outside experts who are helping us navigate BlockFi’s future stages.” We continue to be represented by Haynes & Boone, our principal outside legal counsel and have appointed BRG as our financial advisor. Berkeley Research Group (BRG) is a restructuring firm that works in bankruptcy cases.
Following the demise of Terra’s Luna and UST tokens, as well as the ensuing crypto market crisis, BlockFi accepted a $400 million line of credit from FTX US.
In the midst of the uproar, the blue chips at the top of the crypto market are losing value, with bitcoin’s (BTC-USD) value dropping by about 10% in the last seven days to a depressed $16,867.
Ethereum (ETH-USD) fell to a low of $1,233 last week, a 6.5% drop.
The value of the FTX exchange’s native crypto, the FTT (FTT-USD) token, has similarly plummeted, falling from around $25 per token prior to the meltdown to around $1.31 at the time of writing.