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| After FTX... Cryptocurrency lending firm BlockFi files for bankruptcy |
Cryptocurrency lending firm BlockFi filed for bankruptcy on Monday, becoming the latest victim of the financial crisis stemming from the collapse of cryptocurrency exchange FTX.
BlockFi announced earlier this month that it was halting withdrawals, citing its close ties to Sam Pinkman Fried's FTX exchange and sister hedge fund Alameda.
FTX, Alameda, and dozens of its affiliates filed for bankruptcy on November 11th.
“Since the shutdown, our team has reviewed all of the strategies and alternative options available to us and has remained fully focused on our primary goal of doing what is best for our clients,” BlockFi said in a statement.
Founded in 2017 by Zac Prince and Fleury Marquis, the private company provides loans to clients who use crypto assets as collateral. BlockFi has approximately $257 million in equity and the company plans to allocate enough cash to support it through the restructuring.
Part of the restructuring will include job cuts, and it's unclear how many, but the company said it has embarked on an internal plan to cut spending, including in labor costs.
The New Jersey-based company is one of many that received a financial boost from Bankman-Fred this summer as falling cryptocurrency prices threaten to send major players in the cryptocurrency ecosystem into the abyss. In July, BlockFi received a $400 million financial lifeline from FTX.
The collapse of the FTX exchange caused earthquakes in the cryptocurrency industry. Shortly after the crash, the lending arm of cryptocurrency brokerage Genesis halted repayments and new lending after an "abnormal" number of withdrawal requests exceeded existing liquidity, due to the unrest. After the bankruptcy of FTX.
“In the cryptocurrency world, when a company announces a moratorium on withdrawals, they are already bedridden,” said Daniel Roberts, editor of Decrypt Media, a media outlet focused on the cryptocurrency market.