The bankrupt cryptocurrency exchange FTX is currently collapsing like a dying sun, unleashing a wave of devastation that envelopes all in its path and mismanaged consumer cash totaling billions of dollars in assets. BlockFi, one of the most well-known decentralized lenders in the crypto world, may soon fall victim to that calamity.
BlockFi, once an FTX partner, is considering filing for Chapter 11 bankruptcy soon and has plans to lay off a sizable portion of its workers. Customers were previously informed by the lender that it had “considerable exposure” to the chaos at FTX because of its close financial ties to the struggling cryptocurrency exchange.
Customers were first alerted of the dire situation by BlockFi. According to the company’s statement, they do have significant exposure to FTX and affiliated corporate entities, which includes debts owed to them by Alameda, assets stored at FTX.com, and undrawn sums from their credit line with FTX.US.
BlockFi was already experiencing financial difficulties earlier this year as a result of the losses it sustained during the summer’s “crypto winter,” but in June it signed a term sheet with FTX to obtain what was essentially a financial rescue. BlockFi received “access to extra financing” because of FTX’s acceptance of a $250 million revolving line of credit, and the two businesses discussed potential future cooperation. That must have felt pretty thrilling at the time. The CEO of FTX, Sam Bankman-Fried, bailed out a number of struggling cryptocurrency exchanges, which are currently suffering as a result of his terrible management.
On the day of the bailout arrangement, Zac Prince, CEO & Founder of BlockFi, said, Today’s major news reaffirms the commitment that BlockFi has to serve its clients and ensuring that their funds are preserved. This agreement opens the door for future innovation and collaboration between BlockFi and FTX as they endeavor to promote global prosperity through cryptocurrency financial services.
Less than a week after FTX filed for Chapter 11, BlockFi is reportedly considering bankruptcy and laying off some employees. According to sources, a bankruptcy partner at the law firm Haynes & Boone, has been assisting the business, which was once valued at over $3 billion.
The web3 community has been shaken by FTX’s implosion, which started last week. It is unknown just how much harm the exchange’s demise could have an impact on the wider crypto economy. Some have speculated that it might be the industry’s Lehman Brothers, perhaps bringing down a large number of other businesses as a result. In the event that BlockFi fails, it might be the first domino to fall.
