The cryptocurrency lender BlockFi became the latest victim of the financial contagion released by the fall of Sam Bankman-enterprise Fried’s on Monday when it announced that it would be filing for bankruptcy.
On November 10, BlockFi made the announcement that it has temporarily suspended withdrawals from its clients. The business claimed “substantial exposure” to Bankman-FTX Fried’s exchange and its sibling hedge fund Alameda, both of which filed for bankruptcy earlier this month, as the reason for its decision to liquidate its assets.
BlockFi, which is situated in New Jersey and was one of numerous businesses that got financial backing from Bankman-Fried throughout the course of the summer, when crypto values were plunging and threatening to put several enterprises out of business. BlockFi was provided with a financial lifeline by FTX throughout the month of July. As part of the agreement, FTX extended a revolving credit facility to BlockFi in the amount of $400 million, and it also obtained an option to acquire BlockFi.
The crypto sector is seeing widespread repercussions as a direct result of the loss of FTX.