Blockchain Breaking

Another One Bites the Dust: BlockFi Files for Bankruptcy

FTX’s No.2 lender is another casualty in the most recent FTX fiasco.

BlockFi was created to provide credit services to markets with limited access to simple financial products but has since evolved so much past this. BlockFi grew into a conglomerate of different services and was FTX’s No.2 lender. Knowing this, it is no surprise that the company has filed for chapter 11 bankruptcy and is now of course at the mercy of the scandal and also of the bear market.

Zac Prince, who founded BlockFi, stated in the bankruptcy filing that the biggest reason for the filing is the close ties and exposure they had with FTX, who also filed for protection in the U.S this month after traders withdrew over $6,000,000,000 from the platform in just 3 days as Binance abandoned a rescue deal.

To explain in detail: BlockFi had substantial loans filled with Alameda, a crypto trading firm affiliated with FTX, (interesting as FTX was blamed for using user funds for trades and investments) and thus they stated that their assets and liabilities were between $1 billion and $10 billion. So the numbers are hard to really confirm or deny, but the key point is that BlockFi won’t be under the same scrutiny as FTX as they haven’t done anything illegal and didn’t manipulate their users and the assets they had on the platform. This is a series of unfortunate events and BlockFi is the unfortunate successor to them.

The interesting thing is when you look at banks who take your money for “safe storage” and use that exact money to perform large trades and investments do exactly what FTX did but are never in the firing line, why? Well because governments from around the world bail them out and “loan” them the money they lose while you sit there looking at your fiat holdings devalue overtime as more bills are printed, prices of everyday goods rent, travel etc rise and you have no word in this at all due to the banking system’s reach and power (having lots of money).

The Blockchain industry was built, well let’s rephrase that, Bitcoin was developed on the backend of the financial crisis by maybe someone who was pissed of with exactly this. No we can talk about the crisis for days and the reasons it happened but the main point is that people have no freedom over the value of the money they receive and the time they spend getting it. The balance is not there because people can get paid this month and the value of that money may be less than it was on payday. But we all know this, it’s not news, the key here is to take this info and realize that centralized exchanges are not the way forward. When was the last time you heard about a DEX being hacked or going down and all your assets disappearing? Well it happens, but usually at the fault of the user, not the DEX. Why are projects forced by their community to list on the big CEX’s and pay hundreds of thousands to do so? Why are people still stuck with that train of thought? It makes little sense and hopefully this is the final straw which makes people see where the industry should go.

Signing off

Edward – BDV – Follow on Twitter:

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