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Crypto firm, BlockFi, eyeing bankruptcy over FTX’s failure



Is Africa’s financial system about to experience yet another major disruption? Here's what we know

Cryptocurrency lender, BlockFi, is reportedly planning to file for bankruptcy, according to multiple media reports on Wednesday, days after cyrpto exchange company, Futures Exchange (FTX) declared it was bankrupt.

BlockFi is highly exposed to Futures Exchange, as the latter had offered to provide a $400 million revolving credit facility due to the former’s financial distress.

Both companies had also agreed in July that FTX could buy BlockFi for up to $240 million. However, five months later, Futures Exchange wound up, with allegation of misuse of customers’ fund.

READ ALSO:FTX files for bankruptcy, as financial crisis crashes founder’s networth to $0

Ripples Nigeria had reported that FTX filed for bankruptcy this month, shortly after its rival, Binance, pulled out of an unbinding agreement to acquire the company.

The acquisition was meant to provide liquidity to Futures Exchange, but Zhao Changpeng, the founder of Binance said his company can’t proceed due to alleged misuse of customers’ funds and investigation by United States authorities in the affairs of FTX.

Due to FTX’s bankruptcy, BlockFi is unable to access the credit Futures Exchange had promised it, compounding its financial problem.

In June, BlockFi had sacked several workers, cutting its workforce down by 20 per cent in a bid to reduce expenses. It also reduced the budget on marketing and compensation to executives.Read more

“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,” BlockFi said in a Reuters report this week.

Aside from the credit yet to be drawn, BlockFi also has deposits in FTX, amongst other obligations expected from the company owned by Sam Bankman-Fried. Although BlockFi said the majority of its assets are not held in FTX.

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