Crypto Lender With 'Significant Exposure' to FTX Goes Bankrupt

BlockFi signed deal with exchange earlier this year
By Rob Quinn,  Newser Staff
Posted Nov 28, 2022 3:40 PM CST
Crypto Lender 'Rescued' by FTX Goes Bankrupt
Text, in yellow, announcing cryptocurrency lender BlockFi's bankruptcy filing appears on the company website on a smartphone on Monday, Nov. 28, 2022.   (AP Photo/Peter Morgan)

A cryptocurrency lender that struck a deal with FTX when the market soured earlier this year has followed the crypto exchange into bankruptcy. BlockFi said Monday that it had filed for bankruptcy protection and would use the process to "focus on recovering all obligations owed to BlockFi by its counterparties, including FTX and associated corporate entities," Bloomberg reports. The 5-year-old New Jersey-based company filed for bankruptcy along with eight affiliate companies, reports the Globe and Mail. It said its largest of more than 100,000 creditors, at $729 million, was Ankura Trust, which specializes in managing loans for companies in distress.

BlockFi, which focused on small investors, offering them loans without credit checks and high interest rates for crypo deposits, earlier paused withdrawals from its platform. It said it had "significant exposure" to FTX and affiliated companies. The company reached a deal with FTX amid market turmoil that brought down two other lenders in July, Celsius Network and Voyager Digital, the New York Times reports. FTX agreed to provide BlockFi a $400 million line of credit, and the exchange was granted an option to buy BlockFi for up to $240 million. FTX was "seen as a safety net at the time given the exchange’s credibility and dominance in the crypto industry," the Times notes. (Read more cryptocurrency stories.)

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