FTX has left several associated platforms and projects facing the heat of the community since its bankruptcy. While the consequences were restricted to ethical and monetary terms, a new decision by the financial regulator of the state of California indicated a shift towards regulatory scrutiny.
BlockFi lending license revoked
California’s Department of Financial Protection and Innovation (DFPI) has oversight over all banking and landing operations in the state. According to a press release put out by the regulator, crypto lender BlockFi may no longer engage in lending activities in California. The DFPI also issued a notice to suspend the company’s lending license. The press release read,
“BlockFi reports to the DFPI that it has ceased offering loans in California and asks clients not deposit to the BlockFi Wallet or its interest accounts.”
Furthermore, the regulator announced that it had launched an investigation into BlockFi’s recent conduct. This included its decision to limit activity on its platform and suspend client withdrawals. However, BlockFi perpetrated that they were unable to conduct their business as usual due to the “lack of clarity on the status of FTX.com, FTX US and Alameda.”
It was also interesting to note that this wasn’t BlockFi’s first run in with the DFPI. In February 2022, the Commissioner of DFPI had ordered the lender to cease and desist from “offering or selling unqualified, non-exempt securities in the form of Blockfi interest accounts” in the state.
The FTX connection
In the aftermath of Terra’s collapse, a number of platforms operating in the crypto space were forced to lay off employees. Multiple exchanges and lenders were driven to bankruptcy. BlockFi was one such lender.
After weeks of uncertainty surrounding its future, on 21 June, BlockFi CEO Zac Prince announced that the platform had signed a $250 million term sheet with none other than FTX. This was one of Sam Bankman-Fried’s first bailouts, which subsequently earned him the title of crypto’s White Knight.
Expanding on his announcement, on 1 July, Prince revealed that the deal had been expanded to cover a $400 million credit line from FTX, as well as the option for all out acquisition at a price of up to $240 million. This announcement valued the deal at a whopping $680 million.
Cryptocurrency firm Auros Global misses DeFi payment, thanks to FTX
Cryptocurrency trading firm Auros Global has missed a loan repayment of 2,400 Wrapped Ether (wETH) worth $3 million. The update was shared by the institutional credit underwriter M11 Credit which manages liquidity pools on Maple Finance.
According to M11 Credit, Auros is experiencing a short-term liquidity issue as a result of FTX’s insolvency. M11 Credit also stated that it is in close contact with its borrowers, particularly in light of recent events.
With the announcement of FTX’s bankruptcy filing on 11 November, a number of crypto and blockchain companies have filed for bankruptcy or are about to do so.
FTX debacle leads to crypto crisis
Furthermore, crypto lending firm BlockFi declared bankruptcy on 28 November. Galois Capital and New Huo Technology have also lost millions of dollars from FTX’s collapse.
Crypto mining firm Compute North filed for Chapter 11 bankruptcy on 22 September with almost $500 million in liabilities. Another mining firm Core Scientific’s filing with the Securities Exchange and Commission (SEC) last month revealed that the Texas-based mining company may run out of cash before the end of 2022.
5-day grace period for Auros Global
As per the smart contracts, Auros Global has a 5-day grace period to repay its loan. If it does not make the loan payment by 5 December, it will be declared in default.
In the event of a default, the borrower’s collateral could be liquidated and/or staked maple tokens and USDC on the platform used to cover any shortfalls to lenders. New York courts could also be used to pursue enforcement action.
On 27 November, only three days before M11’s announcement about Auros’ short-term liquidity problems, the trading firm borrowed 2,000 wETH ($2.6 million) with a 14-day maturity. Auros owes M11’s wETH credit pool on Maple an aggregate of 8,400 wETH ($10.7 million).
It should, however, be noted that an algorithmic trading and market-making firm, Auros has not yet addressed the statement by M11 Credit.
Top 10 Cryptocurrencies That Fell After BlockFi Entered Bankruptcy
The bankruptcy of BlockFi which offers USD loans led to the fall of Cryptocurrencies.
Cryptocurrencies have seen tremendous growth this year until BlockFi claimed bankruptcy, Cryptocurrencies that fell soon after this are the top Cryptocurrencies in recent times and now they are at stake since BlockFi disclosed that it is claiming bankruptcy.
BlockFi attributed its liquidity crisis to its exposure to FTX through loans to Alameda, an FTX-affiliated cryptocurrency trading company. According to BlockFi, its cryptocurrencies are currently imprisoned on the FTX platform where they were previously housed. The two platform’s financial relationship started in June when FTX, which the market viewed as a safety net, offered BlockFi a $400 million credit line that its founder, Prince, at the time, claimed would strengthen the company.
However, FTX’s subsequent collapse and reports of corporate errors soon affected BlockFi and it also started to experience difficulties which in turn had a huge effect on the top Cryptocurrencies.
Let us know, the top 10 Cryptocurrencies that fell after BlockFi entered bankruptcy –
1.Litecoin (LTC) – The impact was also on Litecoin which is the biggest dropper among the top 10 cryptocurrencies, which fell by 4.34% to US$74.92 and has been losing ground in recent times. The fluctuations of Litecoin are constantly being studied by crypto experts. According to their forecasts, the average LTC price will be close to $391.25. It could fall to a minimum of $378.04, but it could still rise to $448.73 by the end of 2027.
2.Bitcoin (BTC) – Even during the FTX fallout and macro triggers in recent times, bitcoin maintained important $16,000 support. Even new fallout from the FTX fiasco was unable to affect Bitcoin’s performance. However, the fall of Bitcoin arrived in the form of a bankruptcy filing and a lawsuit from BlockFi, a cryptocurrency lender.
3.Ethereum (ETH) – As U.S.-based cryptocurrency lender BlockFi filed for bankruptcy overnight, causing another casualty of this month’s collapse of the FTX exchange, Ether fell during the trading in Asia at 2.2% to trade at US$1,169, according to CoinMarketCap.
4.Binance USD (BUSD) – This is supported by Binance Global Inc., the largest cryptocurrency exchange in the world, which dropped 5.2% to US$292.91 according to CoinMarketCap due to the bankruptcy of BlockFi.
5.USD Coin (USDC) – USD Coin is down 0.02% in recent times due to the impact of BlockFi. The current CoinMarketCap ranking is #5, with a live market cap of USD 43,277,343,538.
6.Basic Attention Token (BAT) – It has recently been showing a downward trend, losing -26.49% over the previous 30 days. Basic Attention Token has shown a bearish medium-term trend, falling by -34.13% during the last three months. This is predicted due to the BlockFi bankruptcy.
7.Dai (DAI) – It is down by 0.05% in recent times. It is argued that the bankruptcy of BlockFi is the Cause since it is one of the companies supporting Dai.
8.Uniswap (UNI) – Over the following few days, the price of UNI fell by 30% to about $25.60, but after that, it began to rise steadily once more, however it is affected by BlockFi.
9.Solana (SOL) – The price of Solana (SOL) was $22.76 down 20.47 percent in recent times since BlockFi is in bankruptcy.
10.Ripple (XRP)- Ripple (XRP) was down 14.89%, while its 24-hour trading volume was up 168.14% at $4,168,457,428.
Conclusion – These are all the cryptocurrencies that fell soon after BlockFi’s bankruptcy. However, Legal experts claim that digital assets like bitcoin, Ethereum, and other cryptocurrencies fall under a murky area of federal jurisdiction.
They therefore mainly escape the same scrutiny as investments like stocks and bonds. Furthermore, unlike people who have assets with a bank or brokerage that has collapsed, federal funds are not accessible to backstop customers.
The post Top 10 Cryptocurrencies that Fell After BlockFi Entered Bankruptcy appeared first on Analytics Insight.
Crypto Lender Blockfi Files For Bankruptcy Protection To ‘Maximize Value For All Clients’
On Nov. 28, 2022, the crypto lender Blockfi informed the public via a press release that the company has voluntarily petitioned for Chapter 11 bankruptcy protection. Blockfi is now one of many digital currency businesses dealing with significant financial hardships and bankruptcy proceedings in 2022.
Blockfi Voluntarily Petitions for Chapter 11 Bankruptcy Protection
Blockfi has officially filed for bankruptcy protection according to a press release distributed on Monday morning at 10:17 a.m. (ET). The Chapter 11 bankruptcy filings encompass the crypto lender Blockfi and eight of its affiliates.
The crypto firm insists the plan is to “stabilize its business and provide the company with the opportunity to consummate a comprehensive restructuring transaction that maximizes value for all clients and other stakeholders.” Blockfi has cited the FTX collapse as a period when the company took steps to protect Blockfi customers.
On Nov. 10, 2022, Bitcoin.com News reported that Blockfi had paused withdrawals and the firm also cited FTX in that specific announcement. Months prior it was assumed that FTX would be buying Blockfi as the company’s CEO said in July that the exchange had an “option to acquire” the crypto lender.
“With the collapse of FTX, the Blockfi management team and board of directors immediately took action to protect clients and the company,” the company’s financial advisor Mark Renzi detailed. “From inception, Blockfi has worked to positively shape the cryptocurrency industry and advance the sector. Blockfi looks forward to a transparent process that achieves the best outcome for all clients and other stakeholders.”
Compute North, Voyager Digital, Celsius, Three Arrows Capital, and FTX have all filed for bankruptcy protection after dealing with financial problems. Numerous problems are reportedly associated with over-leveraged assets and the Terra blockchain implosion that took place six months ago.
Tags in this story
Bankruptcy, Bankruptcy announcement, Bankruptcy Filing, Blockfi, Blockfi Bankruptcy, Blockfi CEO, Celsius, Chapter 11, compute north, crypto businesses, Financial Issues, financial problems, Financial Troubles, ftx, Mark Renzi, Terra blockchain implosion, Three Arrows Capital, Voyager Digital
What do you think about Blockfi filing for Chapter 11 bankruptcy protection? Let us know what you think about this subject in the comments section below.
Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
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