FTX Collapse: BlockFi Halts Platform Activity, FTX Files for Bankruptcy, and Sam Bankman-Fried Resigns
The recent FTX fiasco, which caught the crypto space by surprise, has caused reverberations throughout the crypto industry. Unaffected projects were quick to release announcements reassuring their users that they were not in any way exposed to FTX; others cited “limited exposure” to FTX. One of the majorly and directly affected crypto projects BlockFi has halted all activities on its platform owing to the FTX collapse.
BlockFi Caught Unawares
BlockFi expressed shock in one of its tweets regarding the FTX event. We are shocked and dismayed by the news regarding FTX and Alameda. “Given the lack of clarity on the status of FTX.com, FTX US and Alameda, we are not able to operate business as usual…Until there is further clarity, we are limiting platform activity, including pausing client withdrawals as allowed under our Terms” BlockFi tweeted from its official Twitter account.
In June, BlockFi received a $250 million credit facility from FTX, at the eleventh hour, when BlockFi went insolvent as a result of general bear market conditions which led to a lack of liquidity. That was the beginning of the unavoidable relationship between BlockFi and FTX.
FTX Files for Bankruptcy as SBF Resigns
FTX has filed for chapter 11 bankruptcy in the US, according to an FTX press release issued by FTX on Twitter. The statement reveals that FTX Trading Ltd., West Realm Shires Services Inc., Alameda Research, and approximately 130 additional affiliated companies had commenced voluntary proceedings under Chapter 11 of the United States Bankruptcy Code.
Sam Bankman-Fried has resigned from his role as CEO, while John Jay Ray III has been appointed the new CEO of FTX Group. The new man at the helm said, “The FTX Group holds valuable assets that can only be effectively administered in an organized joint fashion. I want to assure every employee, customer, creditor, contract party, stockholder, investor, governmental authority and other stakeholder that we are going to conduct this effort with diligence, thoroughness and transparency. Stakeholders should understand that events have been fast-moving and the new team has been engaged only recently. Stakeholders should review the materials filed on the dockets of the proceedings over the coming days for more information.”
A Running List of Affected Companies
Most of the companies exposed to FTX have been having a hard time running their business smoothly as they have funds trapped on the FTX platform. Trading platform Genesis initially tweeted that it had no material exposure to FTT or any other tokens issued by centralized exchanges, and its exposure to FTX has no impact on its ability to serve its client. However, in just two days, Genesis released another statement via a Tweet in which it said its derivatives business currently has approximately $175 million in locked funds in its FTX trading account. Genesis said the trapped funds on FTX do not impact its market-making activities.
In another report by The Block, Digital Currency Group (DCG), the parent company of Genesis, has stepped in to provide a $140 million equity infusion to make up for the trapped funds on FTX.