Crypto lender BlockFi Inc. is preparing for possible bankruptcy filings after halting customer withdrawals as it acknowledged “significant exposure” to bankrupt cryptocurrency exchange FTX.com, the Wall Street Journal reported Tuesday.
See related article: BlockFi’s deal with Sam Bankman-Fried’s FTX will prioritize clients
Fast facts
- The company is now planning to lay off some of its workers as it prepares to possibly file for Chapter 11 bankruptcy, the Journal reported, citing people familiar with the matter.
- BlockFi announced via Twitter it was halting customer transactions on Friday, saying it was unable to operate as normal due to the “lack of clarity” around the status of FTX.com and sister firm Alameda Research.
- In an email to customers on Monday, BlockFi acknowledged that it had “significant exposure to FTX and associated corporate entities that encompass obligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX US.”
- The company is just the latest in a string of firms, including investment firm SoftBank and the Solana Foundation, caught in the contagion of FTX which filed for bankruptcy last Friday without announcing which firms may have been exposed to its business.
- FTX founder Sam Bankman-Fried agreed to help bail out BlockFi with a US$250 million revolving credit facility in June amid the contagion from the Terra/Luna collapse.
See related article: Sam Bankman-Fried steps in to bail out BlockFi