BlockFi Plans To File For Bankruptcy Protection
BlockFi is reportedly planning to file for bankruptcy due to its significant exposure to FTX and Alameda Research, whose debt collection has been troubled by FTX’s bankruptcy proceedings. The company had previously halted customer withdrawals.
According to the Wall Street Journal, people familiar with the matter said that BlockFi, a cryptocurrency lender, is currently preparing to lay off employees and may be planning to file for bankruptcy protection.
As per previous news, BlockFi announced a halt to withdrawals last week as the uncertainty surrounding FTX prevented their company from operating as it should. The company issued an update on Monday saying that FTX and its affiliates are now bankrupt, in the best interest of all customers to continue to suspend much activity on the platform.
BlockFi has significant exposure to FTX and related companies and will continue to work hard to collect all debts. However, debt recovery is expected to be delayed as FTX’s bankruptcy proceedings are still ongoing. BlockFi has hired external expert advisors to take the next steps.
Earlier this year, following the bankruptcy of Three Arrows Capital, BlockFi agreed to a potential acquisition deal with FTX, providing this company with $400 million in credit.
The collapse of FTX is gradually exerting its destructive power and perhaps in the near future the market may witness a wave of “layoffs” and “liquidity crisis”, even “bankruptcy” of companies, funds and projects that come in contact with it.
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