Less than a month after FTX filed for Chapter 11 reorganization, Blockfi did the same. While BlockFi has been struggling to stay afloat for months now (and was even potentially going to be acquired by FTX ), this latest filing signals that the bankruptcies may run deeper than the industry sees.
According to the founder of the Digital Assets Council of Financial Professionals, the FTX debacle will persist longer than previously thought.
“There is clearly a large amount of self-dealing and excessive leverage in the system, and until most of that is washed out through business failures, M&A and regulatory actions, the crypto winter will persist.” Ric Edelman, founder of Digital Assets Council of Financial Professionals
Some in the space are wondering if and when the next firm in the space will find itself on the chopping block.
Sam Dibble, partner at Baker Botts, said that the level of inter company investment within the community is high, so the level of contagion is likely to be higher than in the past.
The companies themselves probably don't know how badly they will be impacted due to the complexity of these inter company investments. I think the entire industry will be impacted by the FTX and Block Fi bankruptcies.
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