Cryptocurrency lender BlockFi filed for bankruptcy on 28 November, making it the latest major digital assets company to fail since FTX, with which BlockFi is financially intertwined.

BlockFi was founded in 2017 by Zac Prince and Flori Marquez. The company lends money to customers using their cryptocurrency assets as collateral.

BlockFi halted withdrawals and limited activity on its platform earlier this month after saying it was affected by the downfall of FTX, which filed on 11 November in the largest crypto bankruptcy to date.

BlockFi has said it had “significant exposure” to FTX and its sister company Alameda Research, including taking a $400m credit line from FTX US that also gave FTX an option to buy the company.

READCheck out FN’s crypto hub for the latest developments

BlockFi was one of several struggling crypto firms that signed deals to be rescued by FTX in the past months. The agreement is now in jeopardy as FTX itself sorts through its financial trouble and is subject to federal and state investigations.

It also holds assets at FTX.com and made loans to crypto trading firm Alameda partly secured by FTX’s FTT tokens.

As of 2021, BlockFi had between $14bn and $20bn of customer deposits and had lent out $7.5bn, The Wall Street Journal has reported.

Write to Alexander Gladstone at alexander.gladstone@wsj.com

This article was published by The Wall Street Journal, a fellow Dow Jones Group title

Leave a Reply

Your email address will not be published.