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BlockFi Mulls Bankruptcy Filing and Layoffs in Wake of FTX Collapse, Met With Binance

in a nutshell

  • BlockFi has hired advisors to investigate a potential Chapter 11 bankruptcy filing, has reached out to Binance for help, and is considering possible layoffs, sources told Decrypt.
  • Crypto lenders suspended all customer withdrawals last week after crypto exchange FTX collapsed.

Cryptocurrency lending platform BlockFi is considering filing for Chapter 11 bankruptcy protection and is preparing to cut jobs in the wake of the financial crisis. Close Crypto Exchange FTX Collapsesa company official said Decryption on tuesday.of wall street journal It first reported on the possibility of filing for bankruptcy.

In exploring its next steps, BlockFi has discussed potential financial support with Binance.

block phi Suspend customer withdrawals last thursday night and on monday reconfirmed It said it would suspend withdrawals and limit activity, admitting it had “significant exposure to FTX” and limited its ability to operate normally.

“Rumors that the majority of BlockFi assets are stored on FTX are false,” BlockFi wrote to customers on Monday. We have significant exposure to FTX and related entities, including undrawn assets from our credit line with FTX US.”

block phi accepted a line of credit of $400 million From FTX US in the summer. BlockFi sought a line of credit after facing its own struggles after the cryptocurrency market crashed. Terra’s LUNA and the End of UST.

At Monday’s all-hands meeting, BlockFi employees were warned of the seriousness of the company’s current situation, but layoffs were not explicitly mentioned, sources said.Company Spontaneous takeover Founded in July, it still has over 300 full-time employees. Blockfi still has enough liquidity to quietly begin processing customer withdrawals made before it was frozen on Thursday night. Decryption I learned.

Towards the bottom of an email to customers on Monday, the company said, “We have hired expert outside advisors to help navigate BlockFi’s next steps. Haynes and Boone will continue to serve as lead outside counsel, BRG is acting as financial advisor.” .” Berkeley Research Group (BRG) is a restructuring company that is often held for bankruptcy proceedings.

BlockFi is just one of the many victims of last week’s unexpected FTX reveal.

Binance CEO Changpeng Zhao says Binance Liquidate the FTT stash, FTX tokens. (Binance subsequently supplied FTT in large quantities I cashed out my FTX shares FTX is in a liquidity crisis after seeing more than $5 billion in customer withdrawals on Sunday, CEO Sam Bakman-Fried said on Tuesday that rival exchange Binance signed a non-binding letter of intent. declared. To purchase FTXBut Binance retired on wednesdaysaid FTX was “beyond our control or ability to assist.”

By Friday, FTX will Filing for Chapter 11 Bankruptcy Protection, and Bankman-Fried stepped down as CEO. FTX is Alleged misuse of client funds To limit Alameda’s trading losses to billions of dollars.

Decryption Spokespeople for BlockFi and Binance did not immediately respond to requests for comment.

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