Another company is succumbing to the contagion as the cryptocurrency market continues to suffer the consequences of the FTX collapse. According to the most recent sources, crypto lender BlockFi will initiate chapter 11 bankruptcy procedures. In order to stabilize operations and maximize value for all clients and stakeholders, BlockFi has formally started restructuring proceedings. To protect client property and pursue recoveries on counter party commitments, the company filed voluntary petitions.
Exposure to FTX
In the United States Bankruptcy Court for the District of New Jersey, the troubled lender filed for chapter 11 bankruptcy protection on Monday. According to BlockFi, it has over 100,000 creditors and assets and liabilities totaling around $10 billion. The business previously claimed to have "substantial exposure" to FTX and other businesses. After news reports showed that FTX was experiencing a severe liquidity shortage, speculation about BlockFi's insolvency began.
When the business stopped accepting withdrawals, people started to worry and wonder about FTX's cash situation. Following unsuccessful investment attempts by cryptocurrency exchange Binance, FTX filed documents on November 11 to declare bankruptcy. As a result of the market expectation of a potential deal not materializing, there was a significant cryptocurrency fall. The FTX exchange, Alameda Research, and more than 130 additional affiliated companies were all parties to the FTX bankruptcy proceedings. Just a few days after FTX announced its bankruptcy, according to a CNBC article, BlockFi started talking to restructuring experts.