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BlockFi could declare bankruptcy after FTX collapse: Wall Street Journal

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Key facts:
  • BlockFi admitted to having “significant exposure” to FTX.

  • According to the WSJ, BlockFi plans to lay off “some of its employees.”

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Cryptocurrency lending and exchange service BlockFi is reportedly preparing to file for bankruptcy. This follows the FTX exchange’s bankruptcy, announced last week. The two companies have an important relationship.

According to a report in the Wall Street Journal, the alleged decision to file for bankruptcy was allegedly made after recognizing BlockFi’s “significant exposure” to the now collapsed FTX exchange.which the company itself admitted in a statement released Monday, Nov. 14.

According to media reports, the company plans to “lay off some of its workers” as it prepares to eventually sign Chapter 11 of the U.S. Bankruptcy Code, which has already been initialed on Friday by the FTX group..

What the WSJ reported might make sense if one takes into account the official statement from BlockFi, in which they clarify that they are working “around the clock” to evaluate “available options.”

While dismissing rumors that most of BlokFi’s assets are in the custody of FTX, In its statement, BlockFi admits that it has significant exposure to FTX. and other related companies, as noted above.

This includes “Alameda’s obligations, assets held at FTX.com, and undrawn amounts on the line of credit with FTX,” as BlockFi noted.

Although the WSJ suggests that BlockFi is about to file for bankruptcy, the company stated in its press release that have the liquidity “to explore all options.” available in the face of the current crisis.

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To this end, BlockFi has hired outside consultants to help them “navigate the next steps,” the letter states.

“We are committed to doing everything we can to be transparent in decisions about our pause, our products, and our platform business,” the company said.

BlockFi reminded in its statement that withdrawals remain suspended. It also again asks customers to refrain from sending deposits. As reported by CryptoNews, this restriction is in effect since last week, one day before FTX filed for bankruptcy.

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