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<\/p>\nNot even one week after crypto exchange FTX officially filed for bankruptcy another Cryptocurrency entity has felt the wrath and submitted its own Chapter 11. The spread and contagion effect from FTX was always a concern and now cryptocurrency lender BlockFi has fallen.<\/p>\n
BlockFi had been struggling even prior to the FTX collapse. In fact, the company was bailed out with credit support form FTX of which the company could access up to USD 400 million. BlockFi is not a traditional exchange, rather a lender in which it used cryptocurrency assets as collateral for the loans. As the value of the crypto assets has declined the value of the company\u2019s collateral became lower and lower and the company was unable to cover its liabilities.<\/p>\n
Once the FTX crisis broke out, the support the credit offered by FTX was of course no longer available leading to a liquidity crisis. The bankruptcy filing outlined that the company currently has 256.9 million dollars of cash on hand which it says will provide enough liquidity in the short term to keep it operational until a restructuring can be done. The company owes approximately 100,000 creditors and the top creditor is the SEC is number which is owed 100 million dollars to settle charges it has in relation to one of its products that it offered. The company has halted withdrawals from its platform and acknowledged the significant exposure it has to FTX.<\/p>\n
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Will BlockFi end up like FTX?<\/p>\n
The manager of the financial group that advising BlockFi has made it clear that the situations Is not the same as FTX. This is because they believe that the management teams of BlockFi are experienced, competent, and responsible as opposed to the leadership at FTX. There have been to date, \u201cNo failure of corporate controls and the company\u2019s financial statements have shown to be trustworthy\u201d. The difference in management and leadership does represent a potential safe exit for BlockFi and perhaps a lower level of negative impact on the crypto sector.<\/p>\n
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Ultimately, the situation surrounding BlockFi just highlights how precarious the whole FTX crisis is and the potential for other firms to be caught up in the fiasco. With such an interconnected market other exchanges and entities need to stay vigilant and aware of their exposure to the falling value of their assets.<\/p>\n","protected":false},"excerpt":{"rendered":"
Not even one week after crypto exchange FTX officially filed for bankruptcy another Cryptocurrency entity has felt the wrath and submitted its own Chapter 11. The spread and contagion effect from FTX was always a concern and now cryptocurrency lender BlockFi has fallen. BlockFi had been struggling even prior to the FTX collapse. In fact, […]<\/p>\n","protected":false},"author":15,"featured_media":510507,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4424],"tags":[],"class_list":["post-510506","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency-trading"],"acf":[],"yoast_head":"\n