•BlockFi is considering filing for Chapter 11 bankruptcy protection and preparing for job cuts in the wake of the collapse of closely-linked crypto exchange FTX, a source at the company told Decrypt on Tuesday.
• BlockFi has retained an advisor to look into a possible Chapter 11 bankruptcy filing, has approached Binance for help, and is looking at likely layoffs, sources told Decrypt.
• The crypto lender paused all customer withdrawals last week as crypto exchange FTX fell apart.
• BlockFi sought a line of credit from FTX US after facing its own struggles as the crypto market tanked following the demise of Terra’s LUNA and UST.
• In an all-hands meeting on Monday, BlockFi employees were warned of the seriousness of the company’s current situation, though layoffs were not explicitly mentioned, the source said.
• BRG is a restructuring firm often retained for bankruptcy proceedings that has been engaged as BlockFi’s financial advisor.
BlockFi, a crypto lending company, is in hot water after the collapse of FTX, a crypto exchange that BlockFi was closely linked to. BlockFi has retained an advisor to look into a possible Chapter 11 bankruptcy filing and is looking at likely layoffs, sources told Decrypt. The crypto lender paused all customer withdrawals last week as the crypto market tanked following the demise of Terra’s LUNA and UST. In an all-hands meeting on Monday, BlockFi employees were warned of the seriousness of the company’s current situation, though layoffs were not explicitly mentioned, the source said. BRG is a restructuring firm often retained for bankruptcy proceedings that have been engaged as BlockFi’s financial advisor.
BlockFi’s Ties to FTX
BlockFi was founded in 2017 and has since become one of the largest crypto lenders in the space. The company offers dollar-backed stablecoin loans and interest-bearing accounts. It’s raised over $350 million from investors such as Galaxy Digital, Valar Ventures, Winklevoss Capital, and Peter Thiel’s Founders Fund. BlockFi is also one of the few regulated companies in the space with a BitLicense from New York state regulators.
The company has come under fire in recent months for its aggressive growth tactics and high-pressure sales culture. It was also forced to pause withdrawals last month after suffering outages due to high traffic on its website. But the real trouble for BlockFi began when FTX collapsed last week.
FTX is a cryptocurrency exchange founded in 2019 by Sam Bankman-Fried, the CEO of Alameda Research—one of the largest quantitative trading firms in the world. FTX is one of the few exchanges that offer leveraged token trading and has quickly become one of the most popular exchanges among traders. It’s also one ofBlockFi’s closest partners; BlockFi allows its customers to trade on FTX through its platform and offers special rates to FTX users who open up a BlockFi account.
The Collapse of FTX
FTX US—a US-based subsidiary of FTX—filed for bankruptcy last week after suffering heavy losses due to the sudden decline in cryptocurrency prices following the demise of Terra’s LUNA and UST tokens. The collapse of FTX sent shockwaves through the crypto community as many traders who were using leverage to trade on FTX were left with heavy losses. BlockFi was also left reeling from the collapse of its close partner; as a result, it paused all customer withdrawals last week.
sources told reporters that BlockFi is now considering a Chapter 11 bankruptcy filing and is preparing for job cuts in the wake of the FTX collapse. The company has retained an advisor to look into a possible bankruptcy filing and has approached Binance for help. BlockFi is also looking at likely layoffs, sources told Decrypt. BRG is a restructuring firm often retained for bankruptcy proceedings that have been engaged as BlockFi’s financial advisor. In an all-hands meeting on Monday, employees were warned of the seriousness of the company’s current situation, though layoffs were not explicitly mentioned, according to one source. It remains to be seen what will happen to BlockFi in the wake of this devastating blow but it is clear that the company is facing some tough times ahead.
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