BlockFi Reportedly Prepares for Possible Bankruptcy
- The Wall Street Journal cited unnamed sourced, who said the exchange was preparing to lay off some of its employees, and is mulling over a potential bankruptcy filing.
- Earlier this week, the crypto lender revealed that it had a “significant exposure” to FTX, but denied that the majority of its assets were held on the collapsing exchange.
BlockFi CEO Zac Prince. CoinDesk
Cryptocurrency lending firm BlockFi could soon file for Chapter 11 bankruptcy protection following the collapse of more than 100 companies connected to FTX, the Wall Street Journal reported on 15 November.
The publication cited “people familiar with the matter”, who said the company was preparing to lay off some of its employees and mulling over a potential bankruptcy filing due to “significant exposure to already bankrupt exchange FTX. The crypto lending platform had originally suspended withdrawals last week due to the “lack of clarity on the status of FTX.com, FTX US and Alameda” which prevented it to operate as normal.
Back on 8 November, BlockFi’s founder and COO Flori Marquez assured users that the company’s products were “fully operational” as it had secured a $400 million line of credit from FTX.US, which was yet to be affected by the collapse of FTX. This Monday the company admitted in a blog post it had a “significant exposure to FTX”, obligations owed to it from Alameda, and an undrawn amount from its credit line with FTX.US. These assets, however, will take some time to recover as all of these entities are going through a bankruptcy process.
The fallout from the collapse of numerous companies connected to FTX continues to impact various crypto companies. Yesterday, Japanese crypto exchange Liquid disabled fiat and crypto withdrawals for its customers in order to comply with regulations connected to FTX’s bankruptcy filing. On the same day, crypto lending platform SALT also paused withdrawals and deposits to its platform as the “collapse of FTX has impacted our business”, though the CEO of the firm clarified that this was not a “notice of going bust”.
- Bankrupt crypto lender Genesis is trying to recover around $500 million from DCG, and another 4,550.5 BTC from DCGI, which it had loaned to the two companies in 2022.
- Both DCG and DCGI requested that the debts were converted to open loans on 9 May, but Genesis declined both offers and demanded the repayment of the loans with interest.
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- The U.S. Department of Justice has expressed its concerns over Sam Bankman-Fried’s seven expert witnesses, and requested they be barred from testifying on the case.
- The DoJ claimed most of the proposed experts lacked the necessary foundation for their opinions, making them unqualified to be an expert witness.
- A cyber security incident at bankruptcy service provider Kroll has resulted in the exposure of “non-sensitive” customer data for claimants involved in the FTX and BlockFi cases.
- Both companies confirmed that account passwords, systems, and funds remained safe, but warned customers to be on the lookout for phishing scams.