The aftermath of the bankruptcy of FTX, a large virtual currency exchange, is growing across the industry and BlockFi, a cryptocurrency lender, filed for bankruptcy, and another lender, Genesis Trading, is also at risk of bankruptcy.
According to reports from the Wall Street Journal and Bloomberg on the 28th (local time), BlockFi, a company that had a close relationship with FTX filed for bankruptcy. BlockFi, which lends money using customers’ crypto as collateral.
As the shock of the crypto loan industry grew, with Voyager Digital and Celcius going bankrupt in a series due to a sharp drop in virtual currency prices such as Bitcoin in June, FTX’s support put out the urgent fire.
At that time, BlockFi received a limit loan worth 400 million dollars from FTX and its affiliate Alameda Research.
At the same time, BlockFi entrusted assets to FTX, and its dependence deepened, such as borrowing funds with token FTT issued by FTX as collateral. FTX also confirmed its intention to acquire BlockFi.
However, when FTX went bankrupt, BlockFi immediately fell into a liquidity crisis, and recently, it stopped withdrawing funds from customers.
BlockPi, established in 2017, received $14 billion to $20 billion as collateral and loaned $7.5 billion to customers as of the end of last year.
Genesis, another cryptocurrency lender, is also on the verge of bankruptcy. According to the industry, Genesis has been struggling to secure at least $1 billion (about 1.36 trillion won) in new funds over the past few days.
Genesis recently demanded that Binance, the world’s largest cryptocurrency exchange, attract investment, but it was not realized. In addition to Binance, it attempted to raise funds to Apollo Global Management, a U.S. fund.
Genesis is in a liquidity crisis in the aftermath of FTX’s bankruptcy. Genesis suspended new loans and repurchase shortly after it announced on the 11th that $175 million was tied to its FTX account.
“We have no immediate plans to file for bankruptcy,” a Genesis spokesman said in a statement. “Our goal is to resolve the situation through an agreement without filing for bankruptcy. “We are continuing constructive dialogue with creditors,” he explained.