Bankruptcy contagion started to spread through the financial markets after the collapse of the FTX cryptocurrency exchange; This threatens the future of cryptocurrency lenders such as BlockFi Inc and Voyager Digital Ltd.
According to Arabiya.net, Blockfi halted withdrawals last week due to uncertainty about FTX, as it said in a blog post on Monday that it had significant exposure to FTX and entities related to the company.
The Wall Street Journal reported in a report that the company is considering filing for bankruptcy.
Bankrupt cryptocurrency lender Voyager was forced to try to find an alternative buyer for its assets after concluding that FTX would not close a planned $1.4 billion deal to buy the company, according to Bloomberg.
Voyager's lead bankruptcy attorney, Joshua Sussberg, said during the court hearing Tuesday: I don't think we've seen the end of contagion or the fear that's spreading through the market.
He added: We were shocked, upset and dismayed.. There will be no deal with FTX, I think that is quite clear.
Crypto hedge fund Galois Capital also has approximately $40 million to $50 million in exposure to FTX.
Brokerage firm Genesis needed a $140 million infusion from its parent company after it disclosed $175 million in closed funds in an FTX trading account.
Hive Blockchain Technologies CEO Frank Holmes said the drop in cryptocurrency prices is also putting pressure on heavily leveraged cryptocurrency miners and hedge funds that have lent money to the sector.
This comes after the price of Bitcoin fell in recent days to less than $17,000, from more than $20,000 at the beginning of the month.
Holmes added: There are still more bankruptcies to come.
All of these problems have long-time cryptocurrency skeptics repeating their warnings.
For his part, Berkshire Hathaway Vice President Charlie Munger described what is happening now as fraud and deceit, saying: This is a bad mix .. I do not like fraud or deceit, and the latter may be more severe than fraud.
And not all digital asset firms were so unlucky, as Celsius Network, a cryptocurrency lender already bankrupt due to allegations of mismanagement, reduced its exposure to FTX by 99% before the group's collapse.
Celsius's chief restructuring officer, Chris Ferraro, said at a bankruptcy court hearing on Tuesday that Celsius had exposure with FTX worth $3.6 billion in January, while that number is now close to $13 million, after significant efforts to move away from crypto platforms. third-party affiliates.
