As the spectacular collapse of FTX continues to ripple throughout the sector, the beleaguered cryptocurrency company BlockFi has filed for bankruptcy in the US.
The business has previously stopped the majority of platform activities due to “substantial exposure” to FTX. BlockFi said that it was seeking judicial protection so that company may reorganize, pay off its obligations, and recoup investment funds. As the value of cryptocurrencies fell early this year, FTX offered a rescue option to BlockFi.
However, FTX, a cryptocurrency exchange, saw its own issues this month as users hurried to withdraw money from the system over concerns about its financial stability. Sam Bankman-Fried, the alleged “crypto king” and former boss, quit, and the business filed for bankruptcy. The slump has eroded confidence in the cryptocurrency market and attracted regulatory attention. The failure of FTX was called “shocking” by BlockFi, a company that provided loans and other financial services secured by the crypto assets of its customers.
BlockFi, situated in New Jersey, claimed in a court document that it owed money to more than 100,000 debtors. It identified FTX, a cryptocurrency exchange with $275 million in debt from a loan made earlier this year, as its second-largest creditor.
It also owes $30 million to the Securities and Exchange Commission, the US financial regulator, after it was discovered earlier this year that the company had failed to properly register its products and deceived the public about the degree of risk in its loan portfolio and lending activities.