Another major crypto company, ‘Blockfi’, has now been hit hard by the damaging ripple effects caused by the FTX burn collapse a few weeks ago. BlockFi, which operates as a cryptocurrency lender, has just filed for bankruptcy in the US.
BlockFi, which was already facing problems before the FTX crash, actually received a bailout deal from FTX after the latest crypto market crash.
However, with FTX now deep in the water, the problems BlockFi faces have only increased. BlockFi, which is well known among cryptocurrency borrowers, called FTX’s collapse and bankruptcy “shocking.”
The FTX crash was one of the biggest money crashes in history, reducing billionaire CEO Sam Bankman Fried’s wealth by 94% in just one night. Being the third largest crypto exchange, the FTX crash has pushed the entire industry down causing huge problems.
BlockFi, which has also been devastated by the industry’s collapse, revealed that it owes nearly $100,000 in money to creditors. FTX is apparently BlockFi’s second largest creditor; The firm has a debt of approximately $275 million with FTX.
BlockFi also owes nearly $30 million to the US financial regulator, the Securities and Exchange Commission. The SEC reported earlier this year that BlockFi misled clients into making high-risk investments.
The crypto lending firm currently has approximately $275 million in debt and will likely pursue a structural restructuring that maximizes value for stakeholders and clients.
“Since the beginning, BlockFi has worked to positively shape the cryptocurrency industry and move the sector forward. BlockFi expects a transparent process that achieves the best outcome for all customers and other stakeholders.” said Mark Renzi, financial adviser at BlockFi.