The FTX Collapse Has Another Crypto Company Preparing for Bankruptcy

Crypto's day of reckoning is here.

The Reckoning

The crypto crisis is far from over.

Just last week, crypto exchange FTX imploded in spectacular fashion, wiping out $32 billion in valuation, and forcing it to declare bankruptcy.

Now, another major crypto company could be poised to follow suit. BlockFi — a major crypto lender that was bailed out by FTX over the summer — is reportedly preparing for a potential bankruptcy filing, The Wall Street Journal reports, in yet another warning shot that the industry's days of reckoning are here.

Bank Run

As of last year, the platform held between $14 billion and $20 billion in customer assets, which are likely worth far less after this year's crypto crash, according to the newspaper's reporting.

The platform paused withdrawals and limited activity last week, claiming it wasn't able to continue its operations while the industry was grappling with the collapse of FTX and the ensuing uncertainty.

Only two days prior, BlockFi founder and COO Flori Marquez assured investors that operations were largely unaffected.

Free Fall

But now the platform is reportedly planning layoffs as well as a potential chapter 11 bankruptcy filing, according to the WSJ.

In a blog post this week, BlockFi admitted that it had "significant exposure" to both FTX and its sister firm Alameda.

"There are a number of scenarios that may be available to us, and we are doing the work now to determine the best path forward," the post reads. "BlockFi has the necessary liquidity to explore all options and we have engaged expert outside advisors that are helping us navigate BlockFi’s next steps."

In short, it's not looking good for BlockFi, especially considering it was FTX that rescued BlockFi from collapse as the cryptocurrency community was still reeling from an impending crisis.

Months later, that crisis has only grown — and an increasing number of players are having to answer some difficult questions.

READ MORE: BlockFi Prepares for Potential Bankruptcy as Crypto Contagion Spreads [The Wall Street Journal]

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