Crypto lender BlockFi is preparing a bankruptcy filing due to its “significant exposure” to the bankrupt crypto exchange FTX, according to the latest report by WSJ. Earlier the lender denied that it had most of its assets at FTX. However, now it has acknowledged that it has an undrawn line of credit with FTX and obligations with FTX. In a blog post, it admitted that it does have ”significant exposure to FTX and associated corporate entities”. This was due to FTX’s bailout of BlockFi in July of this year, which involved FTX providing the lender with a $400 million revolving credit facility and the option to buy the company for up to $240 million. BlockFi paused withdrawals and limited activity last week due to uncertainty about FTX, saying it couldn’t operate as usual. In preparation for a possible chapter 11 filing, BlockFi is now planning to lay off some of its workers, per WSJ. Crypto market fears are growing after FTX reported a severe liquidity crisis in its bankruptcy filings and said it could have more than 1 million creditors. FTX founder Sam Bankman-Fried and his remaining employees reportedly spent the past weekend calling investors to raise financing for a shortfall of up to $8 billion, but have so far been unsuccessful. With BlockFi now heading into cryptocurrency, the repercussions could be even more severe.
Full story : Crypto Lender BlockFi Preps for Possible Bankruptcy Filing After FTX’s Woes.
