This week, there is more bad news for the beleaguered crypto world as BlockFi, one of the biggest centralized crypto lenders, files for Chapter 11 bankruptcy, hot on the trail of FTX.
The news wasn’t particularly unexpected. BlockFi was highly exposed to FTX, pausing withdrawals from the platform earlier this month due to the problems FTX was facing.
BlockFi took a $400 million revolving credit facility from FTX earlier this year after experimental cryptocurrency bank Celsius Network collapsed.
FTX held the load as a custodied asset on the exchange, leading to rumors it was, potentially, earmarked for other, more “nefarious” purposes.
While BlockFi denied that “a majority of BlackFi assets” were custodied on the exchange, it did recognize its significant exposure to FTX and other associated companies, including FTX-linked trading vehicle Alameda Research.
The fifty largest unsecured claims in the Chapter 11 filing include $275 million for FTX.US and $30 million to the Securities and Exchange Commission, the balance of a $100 million fine levied on the company in February.