After weeks of telling their Twitter followers they’re “fine”, the lending platform BlockFi finally admits defeat. Now, despite denying their connection with FTX in the past, BlockFi has cited the firm’s collapse a direct result of FTX implosion. But hear me out, don’t you think that people like SBF, 3AC CEOs and of course the mama bear herself Caroline Ellison could have used a little bit more bullying in school? And now, despite their fast and loose attitude with investors’ money, BlockFi has voluntarily filed for chapter 11 bankruptcy which in essence is an attempt to reorganize the company. In legal terms, this voluntary admit of defeat avoids immediate liquidation of the firm. Be that as it may, one thing we know for sure about chapter 11s is that the customers will almost never get their capital back.
Learn How to Exchange Cryptocurrency to PayPal
BlockFi: Do Less with Crypto!
Yesterday, BlockFi announced on Twitter that they are filing for chapter 11 bankruptcy. They went on further to cite the FTX collapse as the leading cause for their failure.
“Maximizing value for all clients and other stakeholders is our priority. This process will help BlockFi to stabilize our business and provide us with the opportunity to work towards consummating a comprehensive restructuring transaction to maximize value…
As part of our restructuring efforts, we will focus on recovering all obligations owed to BlockFi by counterparties, including FTX…
Acting in the best interest of our clients is our top focus and continues to guide our path forward. Chapter 11 is a transparent process and we will continue to communicate with our clients to ensure they hear directly from us…”
Savior Complex
There once were two terribly disciplined companies who ran a similar scam. Their names were FTX (plus Alameda Research) and BlockFi. Back in July, BlockFi started to tremble as soon as the Luna collapse hit the market. BlockFi shrieked and howled from the losses but Sam Bankman-Fried offered them a $240 million bailout.
But soon, the savior himself filed for chapter 11 bankruptcy. Back in July, BlockFi CEO Zac Prince said they were making the deal to avoid a disaster like 3AC and Celsius.
“Crypto market volatility, particularly market events related to Celsius and 3AC had a negative impact on BlockFi. The Celsius news on June 12th started an uptick in client withdrawals from BlockFi’s platform despite us having no exposure to them.
In the same week, 3AC news spread further fear in the market. While we were one of the first to fully accelerate our overcollateralized loan to 3AC, as well as liquidate and hedge all collateral, we did experience ~$80 million in losses, which is a fraction of losses reported by others.”
And now, the firm has gone on a blog post to throw FTX under the bus and blame the FTX for their gross negligence. Although the details regarding their deal remains unclear, BlockFi has made some hints that the two firms were working with one another. Earlier this month, BlockFi commenced a withdrawal freeze and blamed FTX and Alameda for their lack of clarity.
