Due to its links with FTX, rumours are growing about the probable bankruptcy of BlockFi. A look back at the succession of difficulties that the platform has experienced during this bear market
BlockFi is facing bankruptcy
While the full consequences of FTX’s collapse are yet to be defined, cryptocurrency platform BlockFi is likely to become the next collateral damage in this story, with bankruptcy likely to follow:
NEWS – BlockFi platform braces for possible bankruptcy following FTX collapse (Source: Wall Street Journal)
– Cryptoast – Bitcoin & Crypto-currencies (@cryptoastblog) November 15, 2022
Late last week, the platform had already suspended withdrawals, but while its entanglement with FTX was great, the difficulties seem to go further. In a statement, the company reveals that FTX’s inability to meet its obligations puts it in an uncomfortable position:
Rumours that the majority of BlockFi’s assets are being held at FTX are false. That said, we do have significant exposure to FTX and associated legal entities which includes obligations owed to us by Alameda, assets held on FTX.com and amounts not drawn on our credit line with FTX.US. “
BlockFi also explains that the bankruptcy of FTX prevents it, at least for the time being, from honouring the agreement that had been reached. Indeed, while BlockFi had already encountered difficulties this summer, FTX had come to its rescue, as it also did with other industry players.
A succession of difficulties
Beyond the FTX case, BlockFi has had a difficult bear market so far. First, its dealings with the Securities and Exchange Commission (SEC) led to a $100 million fine. Later, BlockFi played it safe by liquidating the position of Three Arrows Capital (3AC), during the bankruptcy of the investment fund. Then earlier this summer, the platform was forced to shed 20% of its staff.
A bankruptcy is not certain at this time, and according to the company, it is currently working “to determine the best way forward”. But recent events show how quickly everything can change.
In addition, a spokesperson for payments company Curve told CoinTelegraph that the fintech is in the process of taking over BlockFi’s crypto card program, which is provided by its intermediary Deserve:
“Terms are being actively negotiated between Curve and Deserve, but a sale or partnership, if accepted, is pending the conclusion of necessary audits. “
Beware, however, that the payments company Curve, which is the subject here, should not be confused with the decentralised finance protocol (DeFi) of the same name.
Thus, the future of BlockFi is yet to be confirmed, and it is certain that FTX’s impact on the ecosystem will continue to be felt in the future
