Cryptocurrency lender BlockFi to file for bankruptcy, new FTX contagion victim

Cryptocurrency lender BlockFi has announced it's laying off large portions of its staff while also filing for Chapter 11 bankruptcy protection.

Cryptocurrency lender BlockFi to file for bankruptcy, new FTX contagion victim
2 minutes & 53 seconds read time

On November 11, BlockFi paused withdrawals, which coincided with the same day FTX filed for bankruptcy and the fallout of what was the world's second-largest cryptocurrency exchange began.

Cryptocurrency lender BlockFi to file for bankruptcy, new FTX contagion victim 03

On November 14, the cryptocurrency lender reported having "significant exposure" to the now-bankrupt FTX, and all its entities, with sources at the company speaking to the press and informing them that the company was currently preparing to file for bankruptcy. Fast forward to November 28, wherein an official statement, the New Jersey-based company announced it will be focusing on recovering all obligations owed to BlockFi, but "recoveries from FTX will be delayed" due to its bankruptcy.

Rewind back to June of this year, BlockFi announced that it signed a deal with FTX that enabled them a $250 million line of credit that gave the cryptocurrency lender access to capital that "further bolsters our balance sheet and platform strength," according to BlockFi CEO Zac Prince. BlockFi wrote on November 11, the same day that FTX filed for bankruptcy, that "we, like the rest of the world, found out about this situation through Twitter." Adding, the company was, "shocked and dismayed by the news regarding FTX and Alameda."

Cryptocurrency lender BlockFi to file for bankruptcy, new FTX contagion victim 04

The press release states that BlockFi is filing with the court a series of motions to allow the company to continue to operate its business, and the first of these motions will be a request that employee wages and benefits will continue without disruption. Additionally, it expects to develop a Key Employee Retention Plan that will keep trained employees in critical business positions, coinciding with a restructuring process that will feature a reduction of staff and overall expenses.

Notably, BlockFi has $256.9 million in cash on hand, which the press release states will be used to support certain operations during the "restructuring process".

BlockFi isn't the only company to feel the FTX contagion as fellow crypto lending platform SALT paused withdrawals and deposits while announcing that the collapse of FTX has "impacted our bussiness".

In other cryptocurrency news, a $600,000 statue of Elon Musk's head attached to the body of a goat that's straddling a rocket has failed to attract the billionaire's attention. The publicity stunt was conducted by Elon GOAT Token in a move to artificially raise the value of the cryptocurrency token through Elon Musk's acknowledgment of the statue, which was parked out the front of Tesla HQ.

In other news, China has attempted to block the spread of news on Twitter about protests erupting around its country over its strict zero tolerance policy for COVID-19. The great wall of porn is believed to be government associated as there was a sharp increase in spam content at the same time these protests erupted. The spam content was in the form of Chinese escort services and other X-rated content that only appeared when searching the name of major Chinese cities. For more information on that story, check out the link below.

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Jak joined the TweakTown team in 2017 and has since reviewed 100s of new tech products and kept us informed daily on the latest science and space news. Jak's love for science, space, and technology, and, more specifically, PC gaming, began at 10 years old. It was the day his dad showed him how to play Age of Empires on an old Compaq PC. Ever since that day, Jak fell in love with games and the progression of the technology industry in all its forms. Instead of typical FPS, Jak holds a very special spot in his heart for RTS games.

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