BlockFi blamed its chapter 11 filing on the downturn in cryptocurrency prices this summer and this month’s failure of FTX. FTX’s affiliated trading firm, Alameda Research, defaulted on $680m owed to BlockFi earlier this month, the firm disclosed in court papers. Bankruptcy gives BlockFi a chance to formulate a repayment plan for creditors and get back what it can from FTX, though any potential recoveries are a long way off.
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Crypto lender BlockFi follows FTX into bankruptcy
BlockFi’s chapter 11 “underscores significant asset contagion risks associated with the crypto ecosystem, and, potentially, deficient risk management processes,” said Monsur Hussain, senior director at Fitch Ratings.
