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Crypto lender BlockFi files for bankruptcy and implements major layoffs as FTX contagion claims Another: Source

The FTX contagion has just claimed another crypto firm.

BlockFi will file for Chapter 11 bankruptcy protection later today, a company source says Decrypt.

In an official announcement, the New Jersey-based company said it “will focus on recovering all obligations to BlockFi”[ads1]; but that “recoveries from FTX will be delayed” due to the ongoing bankruptcy proceedings at the fallen crypto exchange.

The crypto lender is also laying off a large number of its employees, the source said.

BlockFi, which allowed users to earn money for depositing free cryptocurrencies on the platform, first stopped withdrawals on November 11, the same day FTX filed for bankruptcy. “We, like the rest of the world, found out about this situation through Twitter,” BlockFi wrote in a letter at the time. “We are shocked and appalled by the news about FTX and Alameda.”

Almost a week later, a source in the company said Decrypt that it was considering filing for bankruptcy, given its heavy exposure to FTX.

BlockFi’s ties with FTX

In June, BlockFi announced a $250 million revolving line of credit with FTX about a week after the crypto lender cut staff by about 20%. It said it was reducing its headcount due to “the dramatic shift in macroeconomic conditions worldwide.”

There was also discussion of an outright acquisition in July, but this was dismissed by Zac Prince BlockFi’s CEO.

BlockFi is not the only platform that FTX has bailed out. The crypto exchange also handed out a $120 million loan in August 2021 to Liquid Group after the latter was exposed to a $90 million hack. Liquid was then acquired by FTX in May 2022.

The crypto platform suspended withdrawals on November 15 and has yet to reopen them.

Voyager Digital also received a $500 million line of credit in June from FTX’s sister company Alameda Research. Voyager later filed for bankruptcy on July 6.

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