It’s happened again, folks. Another digital currency company has filed for bankruptcy protection. This time, it’s Block Fi, a crypto lending platform, which was reported to be heading in this direction back in late December.
Block Fi Is the Latest Crypto Firm to Crash
Ironically, the company was one of the few to be “saved” by FTX earlier in the year, though now that its savior is crashing and burning before the eyes of the public, Block Fi no longer has what it takes to remain still, and the company is going under like so many others.
In a letter to customers, the company wrote:
Rest assured, we will continue to work on recovering all obligations owed to Block Fi as promptly as practicable.
Prior to the declaration, Block Fi had halted withdrawals and requested that all traders working with its platform refrain from submitting deposits.
The company’s co-founders Zac Prince (CEO) and Flori Marquez (COO) announced that they were troubled by the direction their company was now being forced to take as a direct response to the problems associated with FTX. They wrote:
We are deeply saddened to see the devastation that is cascading across an industry that we love and believe in, touching the lives of so many people.
Many months ago, Block Fi – like so many crypto companies – was dealing with ongoing hardships thanks to the falling prices of the world’s most renowned coins. Bitcoin, for example, which was trading at a new all-time high of about $68,000 per unit in November of 2021, has fallen into the $16K range at press time, thus losing more than 70 percent of its value. In total, the crypto space has lost more than $2.2 trillion in valuation.
At the time, the firm was approached by FTX, which proposed specific bailout terms that the enterprise found appropriate. Both Prince and Marquez said:
Ultimately, we found a great partner in FTX US, who shares our commitment to clients.
Sadly, what’s going on now with FTX is causing heavy ripples throughout the space, and the fiasco surrounding the now disgraced crypto exchange is likely to be labeled as one of the most embarrassing to occur within the borders of digital currency.
FTX Has Caused Several Problems
For the past three years, FTX was considered a golden player in the crypto arena, and its founder and head executive – Sam Bankman-Fried – was lauded as a genius by many, but that all faded in mid-November of last year when the exchange said it was experiencing a “liquidity crunch” and needed cash.
The company approached its larger rival Binance for help, but when that company refused to provide necessary aid, FTX was forced into bankruptcy proceedings, and its founder instantly resigned from his position. It was a sad, and altogether scary sight to see.