FTX fallout spreads as crypto lender BlockFi files for bankruptcy

By Sarah Lynch

November 28, 2022

At the end of a rocky month (and year) for crypto, BlockFi announced that it filed for bankruptcy on Monday. The crypto lender had previously paused withdrawals on Nov. 11, citing a “lack of clarity” after the cryptocurrency exchange FTX collapsed.

“Since the pause, our team has explored every strategic option and alternative available to us, and has remained laser-focused on our primary objective of doing the best we can for our clients,” an announcement from the BlockFi team stated. “Rest assured, we will continue to work on recovering all obligations owed to BlockFi as promptly as practicable.”

BlockFi’s Twitter announcement added that BlockFi would also “focus on recovering all obligations owed to BlockFi by counterparties, including FTX,” though on its Frequently Asked Questions page, BlockFi disputed “rumors” that a majority of its assets are held at FTX. The company does, however, expect FTX recoveries to be delayed.

“With the collapse of FTX, the BlockFi management team and board of directors immediately took action to protect clients and the company,” Mark Renzi of Berkeley Research Group, BlockFi’s financial adviser, said in a statement.

What is clear, however, is the impact that the FTX collapse has had on BlockFi and the lender’s decision to pause withdrawals, as well as its impact on other players. As of this writing, the price of most crypto tokens has dropped after BlockFi’s bankruptcy’s filing, with ETH down nearly 5% and Dogecoin down more than 11%.

(19)