Cryptocurrency lender BlockFi Inc. is preparing a potential bankruptcy filing after halting withdrawals of customer deposits and acknowledging it has “significant exposure” to bankrupt exchange FTX, WSJ Pro Bankruptcy reported. BlockFi paused withdrawals and limited activity on its platform last week, saying it couldn’t operate business as usual given the uncertainty about FTX. BlockFi is now planning to lay off some of its workers while the troubled firm prepares for a possible chapter 11 itself, people familiar with the matter said. BlockFi didn’t respond to requests for comment. A bankruptcy filing would make Jersey City, N.J.-based BlockFi the latest casualty of the sudden collapse of Sam Bankman-Fried’s crypto empire, which is comprised of FTX, FTX US, trading firm Alameda Research and more than 100 affiliated entities. FTX and its related companies filed for bankruptcy protection Friday without disclosing which other crypto firms may have holdings tied up on its exchange. In a blog post on Monday, BlockFi said it has “significant exposure” to FTX and Alameda, including loans to Alameda, assets held at FTX.com and undrawn amounts from its credit line with FTX US. The company denied that a majority of its assets are custodied at FTX.
