BlockFi just filed for bankruptcy. Another victim of the FTX disaster

The crypto earthquake caused by the fall of FTX continues to claim victims. BlockFi, a cryptocurrency lending platform, has filed for bankruptcy and has suspended most of its services. The move comes shortly after the company admitted that it had “high exposure” to the exchange founded by Sam Bankman-Fried and its associated entities, including the Alameda Research fund.

To the Voluntarily file for the protection of Chapter 11 of the United States Bankruptcy Law, BlockFi begins a restructuring process that includes eight of its subsidiaries. The company says it has $256.9 million in cash to meet its obligations while it continues to operate. FTX US, the US arm of FTX, is one of its main creditors with a $275 million loan.

BlockFi, will try to get back on its feet

This is not the first time that BlockFi has found itself at a crossroads. In fact, his first salvation has ended up becoming his current sentence. The crypto lending platform was rescued in the middle of this year by FTX US. The exchange founded by Bankman-Fried had signed an agreement to offer a revolving credit line of up to 400 million dollars of which only a part was used to continue operating.

According to The InformationBlockFi received as part of the rescue plan 250 million dollars in FTT, the FTX token that in the last 30 days has lost approximately 95% of its value. In March of this year it was trading at about $50 and remained at about $25 in the middle of this year. However, after the Bankman-Fried exchange debacle, the crypto asset fell as low as $1.28.

Details about what happened internally at BlockFi leading up to the company’s decision to file for bankruptcy are not public, but Bloomberg points out that a large part of the company’s balance sheet may have been made up of FTT, so the abrupt drop in the value of this token would have directly impacted them, since they would never have pressed that part of their assets were to lose more than 95% of their value.

The restructuring process will also include layoffs, although there has been no mention of how many people will leave the company. It has only been said that an internal plan to significantly reduce expenses, including labor costs, has been initiated. It is time to wait to find out if at some point BlockFi will offer its services again. Let’s remember that the platform has around 450,000 customers.

It should be noted that the fall of FTX, Genesis and other platforms has negatively influenced the price of cryptocurrencies in. Bitcoin has fallen 70.2% in the last year and at the time of writing this article is trading at $16,211. Ethereum has plummeted 71.3% in the same period. Ultimately, most tokens have been falling. Also, there has been a loss of confidence in the crypto ecosystem in general.

Images: Unsplash

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