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The Bankruptcy Filing Came From BlockFi This Time

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The bankruptcy filing came from BlockFi this time. The filing said the company could face up to $10 billion in debt as FTX spreads.

BlockFi has filed for Chapter 11 bankruptcy, according to a press release. The lending platform is the latest blow to the industry from the collapse of the FTX cryptocurrency exchange.

According to the filing, BlockFi has more than 100,000 subscribers and debt between $1 billion and $10 billion. The filing shows that the company has $256.9 million in revenue.

A statement posted on Twitter by BlockFi explained, “As part of our restructuring efforts, we will focus on collecting all services used by Block Fi from partners, including FTX. Acting in the best interests of our customers is our main goal and continues to guide our way forward. Chapter 11 is a clear process and we will continue to communicate with our customers to make sure they hear from us right away.

This filing is another example of lenders facing cash flow in recent months following the collapse of the company. In July this year, Celsius filed for bankruptcy and recently Genesis stopped liquidating it, forcing Gemini Earn to do so.

According to a source who spoke to Decrypt, in addition to the bankruptcy process, Block Fi will also let go “a large part” of its users. BlockFi was bailed out by FTX in June 2022 following the fallout from the collapse of the failed cryptocurrency hedge fund Three Arrows Capital, but FTX quickly recovered.

With the recent implosion of FTX and the Alameda Research hedge fund, questions about BlockFi’s ability to hedge client assets have begun to emerge. These people only increased when BlockFi announced that they did not have a clear understanding of the situation surrounding FTX and started blocking customers from their platform, including stopping withdrawals.

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