Crypto companies are falling like dominoes, with BlockFi filing for bankruptcy on Monday due to its exposure to collapsed crypto exchange FTX.
BlockFi, once valued at $3 billion, is a lending platform that allows users to post cryptocurrency as collateral for loans in U.S. dollars.
When cryptocurrencies dropped over the last year, the value of the collateral fell below the value of the outstanding loans, causing a liquidity problem that sent the company to FTX for a loan.
FTX, once valued at $32 billion, filed for bankruptcy earlier this month along with its affiliated hedge fund Alameda Research. It owes more than $3 billion to top creditors, per filings.
Unlike FTX, which presented a “complete failure of corporate controls” according to newly appointed CEO John Ray III, BlockFis financial information is trustworthy, according to filings.
