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Crypto lender BlockFi reportedly preparing for bankruptcy, cites significant FTX exposure

BlockFi is the latest victim in the ongoing fallout of FTX's downfall.

BlockFi
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With how massive of a company FTX was, and with its various partnerships in the entertainment and financial worlds, there has been a strong reverberating effect following the crypto exchange’s bankruptcy filing last week. In what’s being referred to as a crypto contagion, several other companies in the business are suffering as a result of their ties to FTX. According to new reports, crypto lender BlockFi could be heading down the bankruptcy route itself.

In a report from the Wall Street Journal, the outlet states that its sources are indicating that BlockFi could be heading towards Chapter 11 bankruptcy, the same form of bankruptcy that FTX filed for last week. Shortly after the news from FTX hit the internet, BlockFi suspended customer withdrawals and deposits on the platform. The company also said that it has a “significant exposure” to FTX. In addition to the bankruptcy filing, BlockFi is expected to lay off a chunk of its workers.

A person holding a phone with the BlockFi app loaded.

Source: Getty Images

The report also includes a quote from an email BlockFi sent out to users following the move to pause operations. “There are a number of scenarios that may be available to us, and we are doing the work now to determine the best path forward,” it reads. “BlockFi has the necessary liquidity to explore all options and we have engaged expert outside advisors that are helping us navigate BlockFi’s next steps.” BlockFi held a lot of its assets at FTX and also had a sizable credit line at the crypto exchange.

FTX’s implosion has not only been a nightmare for the crypto exchange and its CEO Sam Bankman-Fried, but a plethora of other companies and people that were associated with the platform in one way or another. BlockFi is just the latest in a growing list of companies in hot water as a result. Even the affiliated companies that will survive FTX’s collapse have had to release statements to reassure users and investors, such as Immutable and Team SoloMid.

News Editor

Donovan is a young journalist from Maryland, who likes to game. His oldest gaming memory is playing Pajama Sam on his mom's desktop during weekends. Pokémon Emerald, Halo 2, and the original Star Wars Battlefront 2 were some of the most influential titles in awakening his love for video games. After interning for Shacknews throughout college, Donovan graduated from Bowie State University in 2020 with a major in broadcast journalism and joined the team full-time. He is a huge Star Wars nerd and film fanatic that will talk with you about movies and games all day. You can follow him on twitter @Donimals_

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