Analysts are trying to understand what could have happened to bring about the bankruptcy of FTX. However, a few months earlier, the situation of the exchange was in good shape. The company was even seen as a true survivor of the bear market, so much it bloomed. Unfortunately, FTX did indeed collapse, and it took several crypto companies with it. It appears that BlockFi, could be a collateral victim of the collapse of FTX.
The crypto lender is studying the possibility of filing for bankruptcy
Last week, crypto lender BlockFi announced the suspension of withdrawals on its platform. He explained that he could no longer operate normally, after FTX went bankrupt. Now an article from wall street journal revealed that the crypto company could, too, end up filing for bankruptcy. So she could soon place themselves under the protection of Chapter 11 bankruptcy law in the United States. Recall that the crypto lender has admitted that it is significantly exposed to the FTX exchange.
Indeed, BlockFi had stated: “ We have significant exposure to FTX and related corporate entities, which includes obligations owed to us by Alameda, assets held on FTX.com, and unused amounts of our line of credit with FTX US“. Nevertheless, the company maintained that the majority of its assets do not end up at FTX as some rumors suggest.
Furthermore, he appears that BlockFi asked for help from crypto exchange Binance to deal with his difficulties. Sources familiar with the matter claimed that the crypto lender is currently in discussions with the exchange for possible financial assistance.
Layoffs of employees would be considered
Over the summer, BlockFi approved a $400 million line of credit from FTX US. When he started having financial difficulties because of thebear market, he sought to obtain the line of credit. It’s unclear what exactly happened, but the crypto lender now finds himself forced to consider job cuts.
It appears that BlockFi held a general meeting on Monday. During the meeting, he informed the employees of the seriousness of his current situation, without explicitly mentioning that there will be layoffs.
On Monday, BlockFi sent an email (to its customers) in which it mentions that it has “hired expert external advisors“. The company notably recruited Berkeley Research Group (BRG) “as a financial advisor“. BRG happens to be a restructuring company that often intervenes in bankruptcy proceedings.
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