Crypto lender BlockFi files for bankruptcy protection in US

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Cryptocurrency lender BlockFi said on November 28 it was filing for bankruptcy protection in the United States.

With this, BlockFi has become the latest company in the crypto industry to be adversely affected by the implosion of the embattled exchange FTX.

BlockFi had already been reeling since spring, when several big crypto firms collapsed, pushing the market into panic and plunging the value of cryptocurrencies like Bitcoin by 20 percent in a week. Two other crypto lenders, namely, Celsius Network and Voyager Digital, too, filed for bankruptcy shortly after this.

In June, FTX had agreed to provide the crypto lender with a $400 million credit line, which, as per BlockFi CEO Zac Prince would have provided “access to capital that further bolsters our balance sheet”. The said deal also gave FTX the option to buy BlockFi.

However, due to the deal, BlockFi got financially entangled with FTX, and its future became more uncertain once the accounts of all the corporate missteps and suspicious management at FTX came to the fore this month. As it would be, within a few days of the revelations, the exchange collapsed.

According to a New York Times report, BlockFi suspended withdrawals thereafter stating it had “significant exposure” to FTX, which included undrawn amounts from the credit line and assets held on the beleaguered platform.