BlockFi has debts with more than 100,000 creditors, of which crypto exchange FTX is the second largest.
Crypto lender BlockFi filed for bankruptcy Monday, caused by a “significant exposure” to the FTX stock exchange, which also went bankrupt on November 11.
In a statement, BlockFi notes that the platform “has investigated every strategic option and alternative available to us, and has remained laser-focused on our primary objective of doing the best we can for our clients.”
“In the face of FTX’s collapse, BlockFi’s management and board of directors immediately took action to protect clients and the company,” added Mark Renzi, BlockFi’s financial advisor, quoted by AP.
Besides filing for bankruptcy, BlockFi filed a lawsuit against Bankman-Fried’s Emergent Fidelity Technologies vehicle, demanding he turns over a 7.6% stake in the online trading app Robinhood.
BlockFi’s Situation – CNN Data
According to CNN data, the platform had more than 100,000 creditors. Ankura Trust, a company that represents the interests of lenders in stressful situations, is the main creditor of BlockFi, with a debt of $729.
The platform’s second creditor is FTX, which lent BlockFi $275 million. Either way, the surplus funds of this cryptocurrency lender amount to about $257 million, while the sum of its assets and liabilities is estimated to be between $1 billion and $10 billion.
To support itself during restructuring, BlockFi has about $257 million in cash on hand, which the company expects will provide sufficient liquidity.
Said restructuring implies layoffs, to this the company claims that it “initiated an internal plan to considerably reduce expenses, including labor costs.” So far, no other details relating to staffing have not been provided by BlockFi representatives.
Bybit to the Rescue
On Monday, crypto exchange Bybit established a $100 million fund to support institutional clients “during this challenging period in the cryptocurrency industry.”
The company, Coin Telegraph reported, will support market makers – businesses that buy and sell securities – already using the platform, new users, and account managers. They will pay up to 10 million dollars. The funds will be distributed at an interest rate of 0% among all those clients who can request them and remain active on the crypto exchange.
“We’re all in this together, and it’s up to each of us to do what we can to support our industry. This is one way to help give back,” Bybit CEO and co-founder Ben Zhou said in the statement.
In addition, the world’s largest crypto exchange Binance allocated another $1 billion to bail out the cryptocurrency market after the FTX crash, which affected the crypto market in a significant negative way.
By Audy Castaneda