BlockFi Eyes Bankruptcy as FTX Fallout Continues: Report

FTX in July had planned to acquire BlockFi for up to $240 million, depending on the startup’s performance triggers

article-image

Blockworks exclusive art by axel rangel

share

BlockFi is preparing to once again to lay off staffers as the crypto lender considers a possible bankruptcy filing, the Wall Street Journal reported Tuesday.

The move, per the Journal’s report, is the latest contagion directly stemming from the sudden blow-up of crypto exchange FTX — which sent digital asset markets reeling and triggered a rush of big-money withdrawals from centralized exchanges into safer cold storage solutions.

In an ironic twist, FTX in July had planned to acquire BlockFi outright for up to $240 million, depending on the startup’s performance triggers. That potential acquisition came with a precursor: a $400 million revolving line of credit designed to keep BlockFi afloat as the lender worked to limit its exposures to the meltdown in crypto borrowing markets following the implosion of Three Arrows Capital. 

It was one of a number of substantial revolving credit lines FTX floated to embattled firms at the time, typically with the intent, or the option, to later acquire those businesses at rock-bottom prices. 

BlockFi suspended withdrawals last week amid developments that ultimately led to FTX and roughly 130 affiliated firms filing for bankruptcy. Reuters reported Sunday that at least $1 billion of customer funds were missing after FTX then-CEO Sam Bankman-Fried transferred $10 billion of FTX user funds to Alameda Research, a digital assets trading firm Bankman-Fried founded.

“Yet another FTX casualty,” one source said. “When does it end?” 

The source was granted anonymity to discuss sensitive previous business dealings with BlockFi. 

“We are shocked and dismayed by the news regarding FTX and Alameda,” BlockFi said in a Nov. 10 tweet. “We, like the rest of the world, found out about this situation on Twitter. Given the lack of clarity on the status of FTX.com, FTX US and Alameda, we are not able to operate business as usual.”

In its latest bankruptcy filing, FTX lawyers on Monday said the bankruptcy estate may have as many as one million creditors

BlockFi said in a blog post Monday that given FTX’s bankruptcy, it is “the most prudent decision” to continue pausing many of its platform activities.

Added the company: “We do have significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX.US.”

A BlockFi spokesperson did not immediately return a request for comment.

Michael Bodley contributed reporting.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates.jpg

Research

The L2 ecosystem has evolved into a complex landscape, with over $17B in market value and $50B in secured assets. While traditionally seen as high-beta plays on Ethereum, no L2 token achieved a beta higher than 1.0 relative to ETH in 2024. Furthermore, token dilution significantly impacted the sector, with a 1% increase in circulating supply corresponding to a 1.4% decrease in returns.

Key figures including Vitalik Buterin struggle to communicate the network’s core mission in an era of memecoin-minimized attention spans

article-image

World Liberty Financial has been busy buying crypto ahead of its launch

article-image

Trump’s token is setting the “tone” for crypto, Empire co-host Santiago Santos said

article-image

A pair of fundraises by Tapestry and Oh both came with expansive ideas about the future of AI and the role of humans in it

article-image

The Calamos Bitcoin Structured Alt Protection ETF — January is set to offer “systematic risk management” across its roughly one-year outcome period

article-image

Crypto industry elites (and a journalist or two) donned black tie at the Crypto Ball Friday night