BlockFi yesterday acknowledged considerable exposure in the form of not just assets on the exchange but also additional obligations owed by FTX, especially an undrawn line of credit from FTX, despite refuting rumors earlier that the majority of its assets were stored in FTX exchange.
Crypto Contagion Spreads After FTX Collapse
BlockFi Inc. is now said to be in preparation for filing bankruptcy, as per the latest reports. The potential Chapter 11 filing by the ailing crypto lender comes soon after it temporarily halted client withdrawals last week owing to a “lack of clarity” over Sam Bankman-Fried’s FTX empire at the time.
Ironically, FTX had intended to buy BlockFi outright for up to $240 million in July, depending on the startup’s performance. Although the potential acquisition came with a catch. BlockFi had a $400 million revolving line of credit to keep it afloat as it attempted to reduce its exposures from the collapse of borrowing markets following the collapse of Three Arrows Capital, one of the biggest hedgefunds at its time.
What Led To FTX Filing Bankruptcy?
In what appeared to be a potential bailout of the troubled exchange, under a liquidity constraint, Binance signed a letter of intent on Tuesday to acquire its ailing rival, FTX. However, that plan failed a little more than 24 hours later following Binance’s due diligence on FTX.
The renowned crypto exchange, once a leader in its domain, has crumbled into pieces in less than a week. And along with it, many organizations are estimated to go down as well.
The post Breaking: BlockFi Preps For Potential Bankruptcy After FTX Collapse appeared first on CoinGape.
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