Crypto lender BlockFi is mulling potential bankruptcy filing and bracing for job cuts in the aftermath of the downfall of crypto exchange FTX, according to a report published by the Wall Street Journal on Tuesday.
BlockFi froze customer withdrawals last week and requested clients to pause deposits to the company’s wallets and interest accounts on Monday, while revealing that it had “significant exposure” to Sam Bankman-Fried’s FTX, which filed for chapter 11 bankruptcy on Friday.
“While we will continue to work on recovering all obligations owed to BlockFi, we expect that the recovery of the obligations owed to us by FTX will be delayed as FTX works through the bankruptcy process,” the company wrote in a blog post.
In July, FTX extended a $400 million revolving line of credit to BlockFi at the onset of the bear market. The firm, rattled by the collapse of Terra LUNA, intended to use the funds for working capital expenses.
BlockFi is now exploring options to mitigate the current crisis. As per reports, the crypto lender has also held talks with Binance seeking financial aid.
Sam Bankman-Fried (SBF), who was once seen as the crypto savior and the industry’s benevolent king, bailed out several firms struggling to keep up with the crypto winter, along with investing in many others. As a result, FTX’s fall is expected to have a spiral effect on the industry.
According to a separate report published on Tuesday by the WSJ, SBF has been reaching out to potential investors to raise fresh capital despite FTX’s bankruptcy filing.