In the wake of the collapse of closely-related crypto exchange FTX, BlockFi, which offers crypto lending services, is considering filing for Chapter 11 bankruptcy protection and planning to cut staff, as reported by Decrypt on Tuesday.
As a result of the rumors going around that a majority of the lender’s assets are registered at FTX, the lender has denied these rumors, however the lender has acknowledged that FTX owes it obligations in addition to deposits on the platform, as well as an undrawn line of credit, as the lender has also contributed to the platform.
The rumors that a majority of BlockFi assets are custodied at FTX are false. That said, we do have significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX US.”
BlockFi wrote to customers on Monday
On Thursday night, BlockFi paused customer withdrawals, and on Monday, it reaffirmed its decision to keep withdrawals paused and limit activity, acknowledging that it has significant exposure to FTX that limits its ability to carry out its operations as usual.
During a company-wide all-hands meeting on Monday, BlockFi employees were warned about the seriousness of the company’s current situation, despite the fact that layoffs were not directly mentioned. While the company conducted voluntary buyouts in July, there are still more than 300 full-time employees working for the company. According to Decrypt, Blockfi still has enough liquidity to have quietly started processing customer withdrawals made before the freeze on Thursday night, as it appeared to have enough liquidity before the freeze.
