Another one domino card of cryptocurrencies fell: after the Ftx failure at the beginning of the month, it is now the turn of the cryptocurrency lender the blockf to file for Chapter 11 bankruptcy protection.
In the bankruptcy filing filed in the New Jersey court, Blockfi makes the list of over 100 creditors, with stranded assets between 1 and 10 billion dollars. The largest creditor in the bankruptcy file is Ankura Trust Company, with an exposure of 729 million. They follow ftx – with a credit line of 275 million – e even the Sec (the American Consob) with 30 million. The credit from the SEC relates to a $100 million deal reached at the end of an investigation concluded in February that then allowed the company to continue offering regular interest on crypto-deposits.
On the other hand, it also emerges that the blockf has 256,9 million dollars cash, which should provide sufficient liquidity to support DSA's operations during the restructuring process, the company said in a news release.
Cryptocurrencies: who is BlockFi?
BlockFi was Founded in 2017 by the very young fintech entrepreneur Zac Prince, current CEO of the company, e Flori Marquez. It is based in Jersey City, but BlockFi also has offices in New York, Singapore, Poland and Argentina, according to its website.
Prince announced that he is in liquidity crisis mainly due to its exposure to the FTX platform, via ad lending Mall, the company that the founder of Ftx, Bankman-Fried, used to invest clients' money in high-risk speculative operations. FTX had submitted filed for protection in the US this month after traders withdrew $6 billion from the platform in three days and rival Binance did not follow up on a rescue attempt.
According to the Wall Street Journal, customers had deposited between 14 and 20 billion dollars, and the company had lent about 7,5 billion. In the meantime, he had raised a billion dollars in funding from investors such as Dan Loeb, Tiger Global and Bain Capital Ventures, who saw BlockFi as a pioneer in the world of so-called DeFi, decentralized finance.
BlockFi's bankruptcy filing comes after two of BlockFi's biggest competitors, Celsius Network e Travel Digital, filed for bankruptcy in July, citing extreme market conditions that had led to losses at both companies.
Bitcoin: What Happens to Digital Currency?
The cryptocurrency market is in a storm. The price of Bitcoin, by far the most popular digital currency, has fallen by more than 70% since its 2021 peak. It recently returned to the $16.000 area (this morning it is at 15.907,65 euros, up 1,54%), while that Of Ethereum, the second largest crypto by capitalization, slipped below 1.200 again. this morning it was 1.172,68 euros (+3,93%) The capitalization of the entire sector – which a year ago was close to a maximum of 3 thousand billion – has dropped to 775 billion.
Cryptocurrencies: fears for a further spread of the contagion
Genesis Global Capital, the largest cryptocurrency finance company, announced di hired investment bank Moelis & Company to explore options including potential bankruptcy if it fails to raise funds to clean up its delicate accounting situation which has also affected the service Gemini earn (offered by the Winklevoss twins) which has suspended withdrawals in the meantime. The other major fear is that a further slowdown in prices could push some miners – the less efficient ones – to be forced to liquidate a part of the Bitcoin in their portfolio. Feeding the contagion.
