BlockFi is reportedly preparing for layoffs and may file for bankruptcy as FTX's implosion weighs on the the crypto lender
- BlockFi is preparing for possible bankruptcy amid "significant exposure" to failed exchange FTX, WSJ reported.
- BlockFi last week paused withdrawals and limited activity on the exchange, and is preparing for layoffs, per the report.
Crypto lender BlockFi preparing for a potential bankruptcy filing as the repercussions of FTX's downfall continue to spread, according to a Tuesday report from the Wall Street Journal.
The company is also preparing for possible layoffs, sources familiar with the matter told the Journal. The firm said in a blog post on Monday that it has financial exposure to Sam Bankman-Fried's FTX, which filed for chapter 11 bankruptcy on Friday. BlockFi said that it had assets in the exchange as well as obligations owed by FTX's affiliated trading firm, Alameda Research.
"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 blog post noted, adding that it has the necessary liquidity to explore all options for what comes next.
BlockFi halted withdrawals and limited activity on its platform last week, blaming uncertainty around FTX's liquidity issues.
This summer, BlockFi was among a handful of crypto projects that agreed to a rescue from FTX as the market was rattled by the steep drop in the price of crypto assets. FTX furnished a $400 million revolving credit facility for BlockFi, which also included an option to acquire the company, the Journal reported.
Meanwhile, a separate Tuesday report from the Journal revealed that Bankman-Fried has been reaching out to potential investors in attempt to raise money to repay FTX customers. The 30-year-old, who stepped down from his position as CEO the week prior, spent the weekend with several staffers doing outreach for financial commitments that could make up some of the company's $8 billion shortfall.
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