BlockFi, a former FTX partner, plans to lay off a major portion of its workers and is contemplating filing for Chapter 11 bankruptcy, according to a source. Prior to this, the lender had confessed to consumers that it had “considerable exposure” to FTX’s chaos owing to its extensive financial links to the ailing cryptocurrency exchange.
Following FTX, Another Famous Crypto Lender Goes Bankrupt
In a blog post, BlockFi first cautioned consumers about the dire situation. The business noted at the time, “We do have considerable exposure to FTX and affiliated corporate entities, which includes liabilities owing to us by Alameda, assets stored at FTX.com, and undrawn sums from our credit line with FTX.US.” In June of this year, BlockFi signed a term sheet with FTX to secure what essentially amounted to a financial bailout. Earlier this year, BlockFi was already struggling financially due to losses incurred during 2022’s harsh “crypto winter,” but it had already signed a term sheet with FTX in April to secure a financial lifeline. FTX agreed to a $250 million revolving line of credit that provided BlockFi with “access to more financing,” and the two businesses planned future partnerships. That must have looked rather thrilling at the time. Sam Bankman-Fried, the chief executive officer, bailed out a number of troubling crypto exchanges, which are currently suffering as a result of his poor management. Ironically, on the day of the bailout agreement, Zac Prince, CEO & Founder of BlockFi, stated, “Today’s historic announcement reaffirms BlockFi’s commitment to servicing its clients and ensuring their assets are protected.” This agreement also opens the door for future collaboration and innovation between the two companies as they aim to advance global prosperity via crypto financial services. Check out? Mastercard Announces to Assist Banks in Offering Crypto Trading
