Breaking: BlockFi Files For Bankruptcy Amid FTX Contagion Effect
BlockFi Bankruptcy News: While the crypto market continues to face the wrath of the FTX collapse, yet another company is falling prey to the contagion. Crypto lender BlockFi will file for chapter 11 bankruptcy proceedings, according to latest reports. BlockFi has officially commenced restructuring proceedings to stabilize business and maximize value for all clients and stakeholders. The company filed voluntary petitions to preserve client value and pursue recoveries on counter party obligations.
Also Read: Crypto Exchanges Bitfront, AAX Suspend Services Amid FTX Contagion
The FTX Exposure
On Monday, the distressed lender filed for the chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of New Jersey. BlockFi said it had over 100,000 creditors while the liabilities and assets fall in the range of $10 billion. Earlier, the company said it had “significant exposure” to FTX and related companies. Speculation around BlockFi bankruptcy started after reports suggested FTX was facing significant liquidity crunch.
The fear and uncertainty around FTX’s cash crunch began when the company halted withdrawals. On November 11, FTX filed documents to claim bankruptcy following failed investment attempts by crypto exchange Binance. This led to a major crypto crash as the market expectation of a potential deal did not eventually meet. FTX’s bankruptcy proceedings involved the FTX exchange, Alameda Research and over 130 other associated firms. According to a CNBC report, BlockFi began consulting restructuring professionals just few days after FTX’s bankruptcy announcement.
Also Read: Binance Moves 127K Bitcoin (BTC) Worth Over $2 Billion
Extreme Bear Market To Spread Through 2023?
Meanwhile, it remains to be seen how many more companies will face such dire situations as the FTX contagion spreads. The negative market sentiment surrounding FTX is having adverse impact on the cryptocurrency prices, impacting retail investors in the nascent crypto industry. Already, several regulatory bodies across the world tightening policies around crypto in the wake of the FTX collapse.
As of writing, Bitcoin (BTC) price stands at $16,168.48, down 2.46% in the last 24 hours, according to price tracking platform CoinMarketCap. As things stands, it could take a long time through the year 2023 for crypto market recovery.
Also Read: Amid Twitter Dogecoin Payments Talk, Michael Saylor To Buy DOGE?
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