BlockFi is preparing to file for bankruptcy, according to multiple reports, first revealed by WSJ.com. BlockFi is a trading, lending, and yield platform that has previously announced it had significant exposure to FTX. On November 11th, FTX announced that it was filing for Chapter 11, along with multiple affiliated firms, as it was determined the crypto exchange was no longer viable due to a lack of funds.
In a blog post, BlockFi expressed its sadness about the “devastation cascading across the industry” as they “work around the clock to evaluate all options.” BlockFi stated:
“We determined late last week that in the current environment we could no longer operate our business as usual. Given that FTX and its affiliates are now in bankruptcy, the most prudent decision for us, in the interest of all clients, is to continue to pause many of our platform activities for now. The rumors that a majority of BlockFi assets are custodied at FTX are false. That said, we do have significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX.US. While we will continue to work on recovering all obligations owed to BlockFi, we expect that the recovery of the obligations owed to us by FTX will be delayed as FTX works through the bankruptcy process.”
BlockFi had announced last week that it was limiting platform activity, asking users not to deposit funds into BlockFi wallets or yield accounts.
BlockFi had previously looked to FTX to help bail them out when the collapse of TerraUSD, 3AC, and Voyager rocked the crypto-sphere. FTX had committed to providing a line of credit, according to multiple reports.
BlockFi started the year by settling an enforcement action by the Securities and Exchange Commission paying a $100 million dollar penalty. Things have gone downhill from there. BlockFi was once valued at $3 billion in a funding round when the firm raised $350 million in the spring of 2021. Today, that number be headed to zero if the rumblings of Chapter 11 are true.