Crypto Lender BlockFi Pauses Platform Activity, Prepares for Bankruptcy Amid FTX Drama

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Crypto lender BlockFi continues to freeze withdrawals amid the collapse of cryptocurrency exchange FTX, saying they are exploring all scenarios to find the best way forward.

In a Monday blog, the platform acknowledged that it continues to pause a lot of activity due to the recent collapse of FTX and its affiliates. The company also acknowledged that it had “significant exposure” to FTX and its affiliated companies, but stressed that it has the “necessary liquidity to explore all options.”

“There are rumors that the majority of BlockFi assets are in custody on FTX. It is stated that we have significant exposure to FTX and affiliated corporate entities, including obligations owed to us by Alameda, our agreements with FTX.FTX.US credit line,” the blog post reads.

The latest update comes as BlockFi founder Flory Marquez said in a Twitter thread on November 8 that all BlockFi products were “fully operational” as it had a $400 million line of credit from FTX US. Since FTX US has also filed for bankruptcy, the line of credit may no longer be available.

The blog post states, “While we will continue to work to recover all obligations owed to BlockFi, we expect the recovery of obligations owed to us by FTX to be delayed, as FTX goes through the bankruptcy process.” Works.”

Without mentioning a possible bankruptcy filing, Blockfi said that they are exploring a number of scenarios that may be available to determine the best way forward. “Haines & Boone continues to serve as our primary outside counsel, and BRG has been appointed as our financial advisor,” he said.

However, a report on Tuesday wall street journal There are claims that the crypto lender is preparing for a possible bankruptcy filing as well as possible layoffs.

At the beginning of last week, speculations were being made about the health of FTX and Almeida. increased This comes after reports emerged that the investment firm’s balance sheet is loaded with FTT tokens, the native token of FTX which has plunged by more than 90% in the past week.

By the end of the week, FTX announced That it filed for Chapter 11 bankruptcy in Delaware on Thursday, bringing an end to its desperate scramble for investors to repair its balance sheet. Notably, FTX US was also implicated in the proceedings, despite claims by the former CEO that their US exchange was fine.

By 2021, BlockFi has between $14 billion and $20 billion in customer deposits and has lent $7.5 billion. Due to the recent crypto meltdown, deposits are now expected to be very low.

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