BlockFi files for bankruptcy amid FTX fallout

Layoffs and cost cuts are also in the cards, with reports speculating 75% job cuts.

New Jersey-based crypto lender BlockFi has filed for Chapter 11 bankruptcy.

These types of filings are aimed at reorganization, not complete ceasing of operations.

BlockFi stated that the aim is to “stabilize the business”, and added that it’s part of a restructuring plan that “maximizes value for all stakeholders”.

The decision came in the wake of FTX’s fallout, which created a liquidity crisis in many related industry participants.

The failed crypto exchange was BlockFi’s second-largest creditor, which affected the crypto lender’s operations as well.

An unspecified amount of BlockFi’s funds are currently trapped on FTX’s platform, which itself is still having some of its own filings sorted out.

Reuters cited managing director at Berkeley Research Group Mark Renzi as saying that BlockFi’s “exposure to FTX is a major cause of this bankruptcy filing”.

However, he clarified that it’s not experiencing “myriad issues apparently facing FTX”, clarifying that BlockFi’s situation is “quite the opposite”.

The Berkeley Research Group is the financial advisor for BlockFi in the current situation.

As part of the restructuring, BlockFi’s plans also include layoffs, with reports citing that as many as 75% of employees could be released.

This number, however, hasn’t been officially denied or confirmed, with BlockFi’s statement only saying that the company is looking at cutting costs, including labor.

BlockFi also released a blog post, with FAQs regarding its Chapter 11 filing, which also focused on underlining an important point the company wanted to get across – that its goal was to provide its clients as close to full recovery as possible.

Unlike FTX, the company recommended that clients keep their accounts and not uninstall its apps. Instead, in the face of paused withdrawals, BlockFi asked its customers “not to submit any deposits to BlockFi Wallet or Interest Accounts”.

FTX isn’t the only crypto-related bankruptcy this year, with both crypto exchange and lender Voyager and crypto lender Celsius filling out the list.

BlockFi’s filing, however, doesn’t sound similar to those – at least not at this point.

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Written by Kyamil Nasuf

Reporter

Kyamil is a big tech fan, who loves hummus on everything and has enjoyed writing from a young age. He's had experience in writing anything from essays, through personal art, to news pieces and more serious tech analysis. In recent years he’s found fintech and gambling collide with all his interests, so he truly is a great fit to our team.

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