Cryptocurrency lender BlockFi is reportedly planning to file for bankruptcy due to its exposure to failed crypto exchange FTX.
A report in The Wall Street Journal newspaper states that BlockFi is preparing to file for Chapter 11 bankruptcy protection from its creditors due to its heavy investments in FTX, which itself filed for bankruptcy on November 11 citing $8 billion in liabilities.
BlockFi has said that in addition to having substantial deposits with FTX, it had an undrawn line of credit from FTX and obligations that FTX owes it.
Receiving any compensation from FTX is in doubt as the cryptocurrency exchange said in court earlier this week that it could have more than one million creditors.
Last week, BlockFi paused all customer withdrawals in the wake of FTX's collapse, which was precipitated by a report that questioned the exchange’s balance sheet and money funneled to sister trading firm Alameda Research.
Founded in 2017 and based in Jersey City, New Jersey, privately held BlockFi was valued at $3 billion U.S. at its peak last year.
BlockFi has not commented publicly on a potential bankruptcy filing.
