BlockFi is preparing for the possibility of going bankrupt
New York City: BlockFi, a cryptocurrency lender located in New Jersey, is bracing for the possibility of filing for bankruptcy after customers voted to withdraw their money and after the company acknowledged it had substantial exposure to FTX. At this time, the company has intentions of letting go of a number of its employees.
According to recent reports, less than a week after BlockFi suspended withdrawals for thousands of its customers, the struggling cryptocurrency lender is now preparing for the possibility of future bankruptcy due to the decline of the cryptocurrency exchange FTX. This news comes after BlockFi suspended withdrawals for thousands of its customers.
BlockFi is the most recent in a line of companies that have been involved in a financial web with the company FTX, which is no longer in business. According to people with knowledge of the situation, BlockFi is reportedly beginning to prepare layoffs and is contemplating filing for Chapter 11 bankruptcy.
In his most recent tweet, the Twitter magnate known as Crypto Tea said that BlockFi was fined a total of one hundred million dollars by the Security and Exchange Commission. She also said that BlockFi runs out of money, at which point FTX rescues them while taking the remaining funds belonging to BlockFi members.
“The SEC fined BlockFi one hundred million dollars.” When BlockFi is almost out of money, FTX comes to the rescue and saves them, but then FTX takes the remainder of the users’ money.
Blockfi halts customer deposits
The cryptocurrency lender put a stop to withdrawals of client deposits and confessed that it has “substantial exposure” to the failed cryptocurrency exchange FTX. As a result of the unpredictability surrounding FTX, the firm announced that it would be unable to continue operating as normal.
In a tweet from the week before, the Chief Operating Officer and Company Founder Flori Marquez said that all of the company’s goods are now completely functional. Since BlockFi has a $400 million line of credit from FTX.US and not FTX.com, the Chief Operating Officer (COO) views the company as a separate business entity. At the very least, it will continue to exist as a distinct entity until July of 2023. She also took care of the withdrawal procedure for the customer.
BlockFi is a provider of cryptocurrency-focused financial products such as interest-bearing accounts and trading with no transaction fees. The company was founded in 2017 by Zac Prince and Flori Marquez. The lending service was introduced by the firm in January 2018, and it provides customers with the possibility to receive USD loans by using Bitcoin and Ether as collateral.
The group is supported financially by significant investors such as Galaxy Digital Ventures LLC, ConsenSys Ventures, and SoFi, and it is active in 44 states. In addition, it is a non-bank secured lender that offers US Dollar loans to owners of crypto-assets, on the condition that the owners use their crypto-assets as collateral for the loans. Their solutions provide an additional source of liquidity for the blockchain asset industry and are designed to meet the requirements of people as well as institutions who are in possession of blockchain assets.