The team at Cryptnox has a clear plan to change how individuals and businesses manage their cryptocurrencies. Focusing on convenience and security, their crypto-innovative hardware wallet solutions cater to the needs of both consumers and businesses. Cryptnox changes the way key management works, offering a seamless experience for consumers and providing a crypto-friendly solution for businesses. This Swiss-based company is establishing itself as a trusted name in the ever-evolving world of blockchain technology. Reimagining Key Management in the World of…
Per a recent publication from the Wall Street Journal, crypto lending platform BlockFi is set to file for bankruptcy. BlockFi’s distressed tweets and recent reports credit the forthcoming move to FTX exchange’s historic crash, noting “significant exposure” to the failed company.
BlockFi Halts Withdrawals
In the days following the fall of Sam Bankman-Fried’s FTX Global, the crypto industry has continued to feel the aftershocks. FTX filed for Chapter 11 bankruptcy alongside 130 affiliated companies including sister firm Alameda research. According to sources close to the matter, BlockFi may be the latest company to join the list as the contagion continues to spread.
We can no longer operate our business as usual.”
In the tweet, the lender expressed dismay regarding the debacle surrounding FTX. BlockFi attributed its decision to put things on hold to the “lack of clarity” in the recent events. The company advised users against making deposits and also assured them that it would provide updates as soon as possible.
A $400M Credit Line
BlockFi also sent an email dismissing speculation that Bankman-Fried’s empire held a large percentage of its assets. However, the firm did admit that it had funds with the exchange as well as a $400M line of credit from FTX.US. These in addition to obligations Alameda owes the platform constitute BlockFi’s exposure to the FTX ecosystem.
BlockFi’s ties with FTX go back to July this year when the lender struck a deal with the exchange. At the time, the lender was experiencing financial difficulties due to an exposure worth $80M to failed crypto hedge fund Three Arrows Capital. The platform was ready to declare bankruptcy until FTX swooped in to bail it out.
FTX Struck a Deal With BlockFi
Under the July agreement, FTX’s US division provided the lender with the aforementioned $400 million credit line. The arrangement made it possible for FTX.US to purchase BlockFi, although the platform’s valuation depended on certain factors. These included SEC clearance to run a yield-generating platform with up to $10B worth of client assets by the time FTX was set to proceed.
If BlockFi has fulfilled the stipulations FTX could have bought the company for up to $240M. However, if the lender was unsuccessful its selling price could have been as low as $15M.
In the wake of FTX’s liquidity crisis, it is unclear whether or not the deal remains valid. Notably, BlockFi COO Flori Marquez seemed to reference it in a Twitter thread meant to assuage users early into the exchange’s decline.
2) @BlockFi is an independent business entity. We have a $400MM line of credit from https://t.co/rFQz2hySwu (not https://t.co/oVC3gZQ6lb) and will remain an independent entity until at least July 2023.
— Flori Marquez (@FounderFlori) November 8, 2022
The team has also assured customers that it is doing everything possible to ensure a positive outcome.