FTX ripples caused cryptocurrency lender BlockFi to file for voluntary chapter 11 bankruptcy.
BlockFi has begun restructuring to stabilise operations and maximise value for all stakeholders.
Another company is succumbing to the contagion as the cryptocurrency market continues to suffer the consequences of the FTX collapse. According to the most recent sources, crypto lender BlockFi will initiate chapter 11 bankruptcy procedures. In order to stabilise operations and maximise value for all clients and stakeholders, BlockFi has formally started restructuring proceedings. To protect client property and pursue recoveries on counter party commitments, the company filed voluntary petitions.
Exposure to the FTX
In the United States Bankruptcy Court for the District of New Jersey, the troubled lender filed for chapter 11 bankruptcy protection on Monday. According to BlockFi, it has over 100,000 creditors and assets and liabilities totaling around $10 billion. The business previously claimed to have "substantial exposure" to FTX and other businesses. After news reports showed that FTX was experiencing a severe liquidity shortage, speculation about BlockFi's insolvency began.
When the business stopped accepting withdrawals, people started to worry and wonder about FTX's cash situation. Following unsuccessful investment attempts by cryptocurrency exchange Binance, FTX filed documents on November 11 to declare bankruptcy. As a result of the market expectation of a potential deal not materialising, there was a significant cryptocurrency fall. The FTX exchange, Alameda Research, and more than 130 additional affiliated companies were all parties to the FTX bankruptcy proceedings. Just a few days after FTX announced its bankruptcy, according to a CNBC article, BlockFi started talking to restructuring experts.
A Prolonged Extreme Bear Market Through 2023?
How many additional businesses will encounter the same grave circumstances as the FTX epidemic spreads is yet unknown. Retail investors in the emerging cryptocurrency market are being harmed by the unfavourable market sentiment around FTX, which is negatively affecting the price of cryptocurrencies. As a result of the FTX collapse, numerous regulatory organisations throughout the world have already tightened their cryptocurrency laws.
As of this writing, the price of Bitcoin (BTC) is $16,223, down 1.26% over the last 24 hours, according to price monitoring site CoinGabbar. As things stand, a recovery in the cryptocurrency market might not happen until well beyond 2023.
