BlockFi drama: Cryptocurrency lending platform BlockFi is scheduled to file for bankruptcy in the next few days.
While the Wall Street Journal reported earlier this week that the company was “preparing a potential bankruptcy filing”, a new report from Bloomberg published less than four hours ago claims that BlockFi will definitely be going through with the Chapter 11 proceedings, according to unnamed sources familiar with the matter.
Late last week, BlockFi paused withdrawals on its platform citing “market uncertainty” caused by the astonishing collapse of FTX as the reason for suspending normal operations.
BlockFi drama: Liquidity
In a November 14 blog post the crypto lender tried to calm investor outrage by stating that it “has the necessary liquidity to explore all options.”
Regardless, BlockFi admitted to having “significant exposure” to FTX and its sister hedge fund Alameda Research. The post additionally outlined that BlockFi still has “undrawn amounts” from its credit line with FTX US.
Earlier this year, BlockFi became linked to FTX after taking out a US$400 million line of credit from the American arm of the exchange, FTX US. The credit also came with terms and conditions for a potential acquisition by FTX.
The financial life jacket that BlockFi received from FTX kept the lender above water, helping it to avoid full-blown bankruptcy in relation to the Terra ecosystem collapse.
BlockFi did not respond to requests for comment.
Liquid Global doesn’t look too liquid
A similarly embattled crypto firm is Liquid Global, which announced on November 15 that withdrawals from its platform had been suspended.
“Fiat and crypto withdrawals have been suspended on Liquid Global in compliance with the requirements of voluntary Chapter 11 proceedings in the United States,” wrote the company’s official account on Twitter.
More recently, the exchange stated it had disabled deposits on its platform until further notice. Liquid added that it would continue providing updates when new information was available.
The price of the Liquid Global utility token, dubbed ‘QASH’ has whipsawed following the news of shutdowns across the platform. While QASH nosedived nearly 50% after the exchange announced the stop on withdrawals, it has since surged more than 60% and is currently changing hands for US$0.016.