BlockFi just filed for bankruptcy.
Here’s what I know 🧵
Here’s what I know 🧵
On November 10th, BlockFi announced it was halting withdrawals in the wake of the FTX liquidity crisis (which turned into a collapse by the next day)
Why was BlockFi so affected by FTX’s collapse? Let’s back up:
Why was BlockFi so affected by FTX’s collapse? Let’s back up:
BlockFi was actually in trouble first thanks to the Three Arrows Capital collapse earlier this year, BlockFi experienced about $80 million in losses.
FTX swooped in to rescue BlockFi in July and save it from bankruptcy.
FTX swooped in to rescue BlockFi in July and save it from bankruptcy.
The deal had two parts:
A $400 million line of credit.
An option for FTX to buy BlockFi for up to $240 million.
A $400 million line of credit.
An option for FTX to buy BlockFi for up to $240 million.
https://twitter.com/BlockFiZac/status/1542934040092856321?s=20&t=TIrKFUIIjLDT7EEim2qbGQ
However, the deal was not worth $240 million at the time - that was just the highest it could possibly be if FTX exercised its option.
CNBC reported the deal was worth closer to $25 million at the time.
CNBC reported the deal was worth closer to $25 million at the time.
This “rescue” of BlockFi is actually what helped Sam Bankman-Fried become known as the “JP Morgan of Crypto” by the mainstream media.
https://twitter.com/crypto/status/1566227207684603904?s=20&t=TIrKFUIIjLDT7EEim2qbGQ
BlockFi thought it was being rescued, but it just hitched itself to a different shaky creditor.
When the deal happened in July, many believed FTX was in a strong liquidity position.
Turns out, that wasn’t the case.
When the deal happened in July, many believed FTX was in a strong liquidity position.
Turns out, that wasn’t the case.
BlockFi’s line of credit is gone, and its acquirer is gone as well.
We’ll have to wait for more details to see BlockFi’s complete liquidity situation, but its obviously not good after huge losses from Three Arrows, Luna, and now the FTX collapse.
We’ll have to wait for more details to see BlockFi’s complete liquidity situation, but its obviously not good after huge losses from Three Arrows, Luna, and now the FTX collapse.
In its bankruptcy filing today, BlockFi noted that it has more than 100,000 creditors and between $1 billion and $10 billion in liabilities.
BlockFi has $256.9 million in cash on hand.
BlockFi has $256.9 million in cash on hand.
https://twitter.com/BlockFi/status/1597253469374910466?s=20&t=_zT2aM_TkrzEp9R4o4Io9Q
BlockFi still owes FTX $275 million.
The SEC is also listed as one of BlockFi’s top creditors.
BlockFi was fined $100 million by the SEC in February for failing to properly register its crypto lending product.
The SEC is also listed as one of BlockFi’s top creditors.
BlockFi was fined $100 million by the SEC in February for failing to properly register its crypto lending product.
Make sure to follow me to stay updated.
I’ll keep posting new details as I find them.
Subscribe to GRIT for even more 👇
gritcapital.substack.com
I’ll keep posting new details as I find them.
Subscribe to GRIT for even more 👇
gritcapital.substack.com
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