Crypto Lender BlockFi Files For Bankruptcy

Key Insights

• FTX contagion spreads but crypto traders do not panic.
• At first glance, BlockFi has enough liquidity to ensure an orderly bankruptcy process. 
• Crypto markets are under some pressure today, but there is no BlockFi-related sell-off. 

FTX’s Collapse Pushed Crypto Lender BlockFi Into Bankruptcy

Crypto lender BlockFi has just filed for bankruptcy as contagion from the collapse of the crypto exchange FTX continued to spread. Previously, BlockFi halted withdrawals after FTX problems emerged, so the filing is not a big surprise for those who follow crypto markets.

Back in June, BlockFi received emergency funding from FTX when it faced a liquidity crunch after the fall of Three Arrows Capital.

BlockFi noted that the Chapter 11 protection should help “stabilize its business and provide the company with the opportunity to consummate a comprehensive restructuring transaction that maximizes value for all clients and other stakeholders.”

BlockFi also noted that it had $256.9 million of cash on hand, which should be enough to “provide sufficient liquidity to support certain operations during the restructuring process.”

Crypto Markets Stay Relatively Calm As Traders Were Prepared For Bad News

At this point, the reaction of the crypto market is relatively calm. Bitcoin is trading near the $16,300 level, while Ethereum  settled below the $1,200 level.

Solana, which is one of the main victims of the FTX collapse, has once again found itself under pressure and moved towards the $13.50 level.

The market reaction is limited as crypto traders were prepared for BlockFi’s filing after the company halted withdrawals. There are no big news in the initial filing, which is also good for crypto markets.

Anyway, traders will remain focused on finding weak players as the industry continues to deal with the consequences of FTX’s collapse. The general market sentiment remains bearish, so any negative surprise could trigger a strong sell-off in crypto markets.

For a look at all of today’s economic events, check out our economic calendar.