- BlockFi claimed to have “substantial exposure” to the bankrupt exchange FTX.
- BlockFi got a $250 million loan from FTX in June.
BlockFi, a cryptocurrency lender, stated on Monday that it will “consider all possibilities” to reduce its “significant exposure” to FTX’s bankruptcy. After the biggest blowup in the cryptocurrency industry prompted calls for stricter regulation, FTX founder Bankman-Fried also resigned as CEO.
BlockFi stated:
We do have significant exposure to FTX and associated corporate entities that encompass obligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX.US.
BlockFi Had Corporate Assets Held With FTX
As other crypto financial institutions, notably Three Arrows Capital and Voyager Digital, fell in the wake of the summer’s market collapse, BlockFi got a $250 million loan from FTX in June. The loan gave BlockFi access to a credit line with Sam Bankman-FTX Fried’s US, which was needed to keep the business solvent. Additionally, BlockFi claimed that it had corporate assets with FTX and is owed money by Bankman-Fried-owned cryptocurrency trading company Alameda Research.
Because of these exposures, BlockFi was intertwined with FTX, which may have impacted the cryptocurrency exchange’s financial viability after it declared bankruptcy on Friday. BlockFi did not provide specific figures regarding the extent of its exposure to FTX, but it did state that a delay in obtaining the assets Alameda owed it was anticipated. BlockFi earlier disclosed on Friday that it has stopped letting its clients withdraw money from their accounts.
Similar steps were taken by another cryptocurrency lender, Celsius, to try and maintain liquidity when multiple cryptocurrencies collapsed throughout the summer, but it ultimately declared bankruptcy in July. Although BlockFi claimed to have “the requisite liquidity to examine all possibilities,” it decided it was best for the company to halt consumer withdrawals.
