$355M BlockFi Funds Locked Away In FTX Exchange
According to information made public by attorney Joshua Sussberg, over $300 million worth of assets owned by BlockFi was locked on the FTX exchange.
Will these funds, however, be recoverable?
Frozen Funds On FTX
Following the FTX crash, it was discovered that the BlockFi lending platform, which recently suffered insolvency and filed for bankruptcy, had over $300M worth of assets locked on the FTX exchange. An attorney, Joshua Sussberg disclosed this information to the media on Tuesday.
Alameda Research had borrowed more than $600 million from this platform and defaulted to repay it before the crash, so this $300M isn’t the only money that has been locked away in the FTX exchange.
The BlockFi exchange went on to declare bankruptcy after the company started having financial problems. Due to the significant outflow of funds following the FTX crash, it had already stopped withdrawals on its platform before filing for bankruptcy.
However, the platform had been depending on the FTX company’s line of credit after it had to liquidate one of its clients. This however came to an abrupt end when FTX was also liquidated and then filed for bankruptcy.
The events that led to FTX declaring bankruptcy occurred after a report was released revealing that the sister exchange Alameda Research held the majority of its native token FTT. The market and crypto community reacted negatively to this discovery.
Insolvency In Crypto Firms
According to BlockFi’s filing proceeding, the company still has over $200 million in reserves, some of which came from the initial liquidation of some of its holdings.
However, BlockFi has stated that it intends to allow users who still have funds in the exchange to withdraw them via the BlockFi wallet system.
Sussberg, on the other hand, is hopeful that BlockFi will be able to retrieve their funds from the FTX exchange, though he questions whether this is even possible.
Sussberg also appeared in court, informing the judges that FTX has over a million creditors and was under a hack attack at the same time its company filed for bankruptcy protection. And as a result of this hack, millions of dollars were drained from FTX wallets on the exchange.
Similarly, FTX and BlockFi have both filed for bankruptcy due to events that resulted in their liquidation and insolvency.
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