BlockFi Enters Graveyard – The Next Major Crypto Bankruptcy After FTX
As we approach almost a full year of being in a bear market, one industry has taken a steep drop downhill: crypto. This past month, Sam Bankman-Fried’s cryptocurrency exchange FTX filed for bankruptcy, losing over $1 billion worth of shareholders’ money. Now, popular crypto lender BlockFi has suffered the same fate, as they recently filed for Chapter 11 bankruptcy following their failed rescue from FTX. In recent months, lender BlockFi had begun struggling with liquidity and funding, forcing a deal with FTX where a package of $400 million was loaned with a right to acquire BlockFi by July 2023. As FTX went under, BlockFi lost the safety net it had gained to pay back its creditors, with liabilities for the company ranging from $1 to $10 billion.
The day FTX filed for bankruptcy, BlockFi proceeded to freeze customer withdrawals, leaving thousands of investors unable to access their funds. Currently, BlockFi becomes the newest cryptocurrency powerhouse to follow FTX, Voyager, and Celsius in the Chapter 11 graveyard. Following these fallouts, experts also have begun suggesting regulators such as the SEC and CFTC will begin to enforce stricter legislation on the crypto industry as soon as 2023. Because of this and the current instability of the market, several bullish crypto investors have started to move their savings to more traditional asset classes, such as bonds and value stocks. In the meantime, investors who lost access to their funds with BlockFi, or any of the aforementioned crypto companies, will have to wait years for legal proceedings to turn out in their favor, hopefully returning many of their lost assets.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.