Source: news.google.com
This is a weekly feature that will review your week in crypto, blockchain, and Web3, offering insights and analysis. See our previous column here.
This week began as few have in the past and many will in the future, with a cryptocurrency company admitting to financial difficulties thanks to the spectacular collapse of Sam Bankman-fried‘s FTX exchange.
crypto lender FiBlock archived file for Chapter 11 bankruptcy on Monday. In July, FTX granted BlockFi a $400 million revolving credit facility that included an option to purchase BlockFi for up to $240 million. Earlier this month, BlockFi suspended withdrawals on its platform after FTX issues came to light.
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While he also blames the negative year for cryptocurrencies for the company’s situation, Mark Renzi with the Berkeley Research Group – the proposed financial advisers to the company – emphasized that the FTX implosion was “one of the main causes” of BlockFi’s bankruptcy.
page 41 presentation described FTX’s fall as a “death spiral,” and BlockFi’s inability to access its line of credit forced the company to seek bankruptcy protection.
BlockFi had already secured $275 million in the facility, and on Nov. 8 requested an additional $125 million, according to the filing. However, by this time news of FTX’s problems had spread, and FTX did not comply with the request. A short time later, the other business firm of Bankman-Fried Alameda Investigation defaulted on $680 million of collateralized loan obligations it owed to BlockFi.
A new way to go
BlockFi is now seeking to “stabilize” its business through restructuring, and Renzi’s affidavit states that the company “does not face the myriad of issues that FTX appears to face.” It seems like a tough row to settle though, as the FTX bankruptcy will likely only hinder BlockFi’s attempts.
It’s a far drop for BlockFi, which raised $350 million at a $3 billion valuation in March 2021 and followed four months later with a $500 million round at a price reportedly $4.8 billion valuation.
More stories about the FTX wave of destruction will continue in the coming months. On Tuesday, The information reported some Web3 unicorn companies that FTX invested in at high valuations may have trouble attracting investors willing to pay the same for FTX holdings.
The story is really just beginning.
Read our coverage of all FTX-related events and more below:
Illustration: Dom Guzmán
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