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

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 FTX.com, 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.

Join the conversation

Opinions

Support Ripples Nigeria, hold up solutions journalism

Balanced, fearless journalism driven by data comes at huge financial costs.

As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.

If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.

Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.

Donate Now