Blockfi looks at bankruptcy, while FTX Fallout continues: report

15. November 2022

Krypto News Österreich

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Blockfi is preparing for bankruptcy, while the FTX fallout continues

Blockfi is preparing to relieve employees again, since the crypto loan considers a possible application for bankruptcy, This reported the Wall Street Journal Tuesday.

The step, according to the journal of the journal, is the latest contagion, which is directly due to the sudden explosion of the crypto exchange FTX-which brought the markets for digital assets to falter and triggered a rush of large money withdrawals from centralized cooling stores.

A blockfi spokesman did not immediately answer a request for comment.

Ironically, FTX himself planned to acquire Blockfi for up to $ 240 million in July, depending on the performance losses of the startup. This potential takeover was accompanied by a forerunner: a revolving credit line of $ 400 million that Blockfi was supposed to keep afloat, while the lender worked to limit his risk compared to the collapse of the crypto credit markets after the implosion of Three Arrows Capital.

It was typically with the intention or option of later acquiring these companies at low prices at low prices.

Blockfi exposed payouts in the middle of developments last week, which ultimately led to FTX and around 130 associated companies registered bankruptcy. On Sunday that at least $ 1 billion was missing in customer funds after the FTX CEO Sam Bankman-Fried then transferred $ 10 billion in FTX user funds to Alameda Research, a trading company for digital assets founded by Bankman-Fried.

"Another FTX victim," said a source. "When does it end?"

The source was granted anonymity to discuss sensitive previous business relationships with Blockfi.

"We are shocked and dismayed about the news about FTX and Alameda," said Blockfi in a tweet on November 10th. "As the rest of the world, we learned about this situation on Twitter. In view of the ambiguity about the status of FTX.com, FTX US and Alameda, we cannot continue our business as usual."

In their latest bankruptcy application, FTX's lawyers said on Monday that the bankruptcy estate could have up to one million creditors.

blockfi said in Blog post Monday that, given FTX's bankruptcy, it is "the most prudent decision" to continue to pause many of its platform activities.

The company added: "We have a considerable commitment to FTX and affiliated companies that comprises obligations that Alameda owes us, assets that are kept at FTX.com and not used amounts from our credit line with ftx."

Michael Bodley contributed to reporting.

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The Blockfi contribution looks into bankruptcy, while FTX Fallout continues: The report is not a financial advice.