FTX’s rot spreads, and BlockFi seems to be the latest victim as its files for bankruptcy under Chapter 11 Bankruptcy Code. What is next for the platform and its users?
BlockFi is the latest to fall victim to bankruptcy, announcing its filing for the same on November 28, under Chapter 11 Bankruptcy Code. Currently, the company and its affiliates need to deal with over 100 000 creditors, with 1 billion USD to 10 billion USD worth of assets. From its official announcement, the exchange wishes to revamp its services to create more value for all its users and stakeholders.
The announcement also mentions that the FTX bankruptcy is one reason for the delays users will have to endure. FTX news has been circulating the crypto space for the past month, being the hottest topic within the sector. So far, it has been the reason for several coins’ price collapses, especially Solana and its native token, FTT.
Therefore, as the drama ensues still, BlockFi is working to recover all funds owed to the company by the fallen FTX. It stands with the fact that it tried to exercise its due diligence. However, considering how far the latter is nose-diving, there is little to be done than wait.
BlockFi tries to cushion Chapter 11 results
As of 28th, the company put forward a request to the bankruptcy court to continue with some of its operations. BlockFi wished to continue issuing employee salaries despite the rough times its experiencing. Additionally, it hopes that its internal resources will remain unaffected during the bankruptcy process. That is to mainly avoid any shortcomings in its business model, which could further plunge the company’s situation.
During the restructuring steps it wishes to initiate, BlockFi will also cut costs, especially connected to labor. The current $256 million+ the company has will be enough to keep the platform’s liquidity in check. Nonetheless, it is hard to say if it will manage to meet client demands during the proceedings.
Pausing other platform activity
BlockFi also informed its customers most platform activities were paused. While the process unfolds, the company hoped to assure its users that it would explore other avenues to deal with the ongoing bankruptcy case.
It further mentioned that its voluntary filing for bankruptcy was a path toward stabilizing its services for better outcomes in the future.
BlockFi is but one of the companies suffering after FTX’s crash. Genesis crypto exchange is also in danger of following suit. Although nothing is for sure at the moment, it is safe to say that this ripple effect could be detrimental to the huger crypto community.
