BlockFi Files for Bankruptcy 

The Crypto Lending Firm is the latest FTX contagion as the company has officially filed for bankruptcy protection according to Business Wire. According to the filings, BlockFi and eight of its affiliates are filing for Chapter 11 bankruptcy protection as part of its efforts to “stabilize the business.” BlockFi International has also filed for bankruptcy with the Supreme Court of Bermuda, according to the report.

What is BlockFi’s relationship with FTX?

The Crypto Lender tweeted that it will focus on recovering all obligations owed to BlockFi by its counterparties, including FTX, as part of its restructuring efforts. FTX US had earlier in the year bailed out BlockFi and reached an agreement with the lending firm with the option to purchase it at $240M. As such, there were concerns that BlockFi’s exposure to FTX could lead to some liquidity crisis after the crypto exchange collapse and rightly so. BlockFi halted withdrawals on November 11 citing a “lack of clarity” over the FTX as the reason for its decision. 

Although BlockFi had denied that majrotiy of its assets were held in custody by FTX, it acknowledged at the time “we do have significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at, and undrawn amounts from our credit line with FTX.US.”

The Crypto lending firm would likely not be the last FTX domino to fall as rumors continue to spread of various companies that have significant exposure to FTX including Crypto lender Genesis that is yet to receive a $500M bailout to solve its liquidity crisis.

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