The consequences of the collapse of FTX are being felt. It is now BlockFi's turn to prepare for a potential bankruptcy. So, what is the concrete situation of the American company?
A new player in great difficulty
The crypto ecosystem is taking the hit. The bankruptcy of the giant FTX and Alameda Research plunges a new player into turmoil: BlockFi. The crypto loan company is on the verge of bankruptcy.
BlockFi is an American exchange that allows its users to generate interesting interests by making their assets work on DeFi. The company also offers a crypto bank card service in partnership with the giant Visa.
Recently the platform had stopped withdrawals and informed its users that it would limit the activity of the platform, on November 11. The company said it was "shocked and appalled" by the failure of FTX and Alameda Research.
Soon after, many users revealed that their BlockFi bank cards had stopped working. The company's teams then sent an email to their users specifying:
"Dear cardholder. In light of recent developments at BlockFi, which are beyond our control, we are writing to inform you that the purchase privileges on your BlockFi Rewards Signature Visa card are suspended until further notice. As a result, you will not be able to make purchases with your card."
According to the Wall Street Journal, BlockFi is preparing for a possible bankruptcy and would therefore be the next domino to fall after the resounding crash of FTX.
Curve to the rescue?
BlockFi would have considerable exposure to FTX which would therefore put the company at risk. The crypto lender is also reportedly preparing to lay off some of its employees.
As a reminder, FTX had granted a loan of 400 million dollars last July when the latter encountered difficulties following the collapse of Terra LUNA. A gigantic exposure pushes the company towards bankruptcy.
Faced with this situation, certain actors are positioning themselves to support the company. For these companies, BlockFi's credit card program is an attractive argument. Indeed, it should be noted that nearly 87,000 customers use the company's credit card services.
Interested players include the decentralized finance protocol Curve Finance. Curve Finance would like to buy this program or establish a partnership with Deserve, the partner in charge of BlockFi bank cards. Curve says about it:
"What sets our offering apart is that Curve is not a centralized exchange and has no business being one. We issue a crypto rewards credit card and earn money from interchange revenue and interest; We are not trying to convert Credit Card Customers to Exchange Customers."
Curve is one of the giants of decentralized finance. According to the specialized site DeFiLlama , it is the 5th protocol in terms of TVL (Total Value Locked or all assets locked to the protocol) on DeFi.
Other Companies Struggling After FTX's Collapse
The inventory of struggling companies after the FTX crash is far from over. As after the collapse of Terra, it will probably take several weeks or even months to know the extent of the damage.
For now, apart from BlockFi, Crypto.com is suffering the consequences of this crash with a major dump of its CRO token. This fall follows the recent publication of proof of reserves which did not convince the crypto community and the revelation of a $400 million shipment to Gate.io. CRO is down 25% over the last 7 days despite recent statements from the CEO of Crypto.com.
Voyager Digital, which had been offered the support of FTX after its bankruptcy, now finds itself doomed. In the DeFi sector, Serum has just carried out a fork to combat the risk of theft of funds. Moreover, the entire Solana ecosystem is still under pressure.
We will carefully monitor developments concerning BlockFi and all the players who could suffer the consequences of the FTX crash.
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