How FTX ‘death spiral’ spelled doom for BlockFi, according to bankruptcy filing

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• BlockFi’s Chapter 11 bankruptcy troubles began with FTX, a BlockFi advisor said in a court filing, with a liquidity injection that was supposed to save the company.
  
• BlockFi advisor Mark Renzi said that BlockFi was completely unlike FTX, but laid the lion’s share of the blame at the feet of many others: on the broader markets, on bankrupt hedge fund Three Arrows Capital, and on FTX.
  
• On November 10, the day FTX filed for bankruptcy, BlockFi paused customer withdrawals. Investors, like at FTX, Voyager, and Celsius, are now left in limbo, with no access to their funds.
  

There was supposedly one man who could save crypto — Sam Bankman-Fried. The former FTX CEO bailed out and took over crypto firms as cryptocurrency markets withered with Terra’s spring crash. In October, FTX won the bidding war for bankrupt crypto firm Voyager Digital in a highly advantageous deal.


With the collapse of FTX, the firms which Bankman-Fried saved now find themselves in an uncertain state. Voyager put itself back up for auction last week. Today, BlockFi filed for bankruptcy in New Jersey, after weeks of speculation that the FTX collapse had fatally crippled it.

The FTX “death spiral,” as BlockFi advisor Mark Renzi put it, has now spread to another crypto entity. BlockFi’s bankruptcy had been anticipated for some time, but in a detailed 41-page filing, Renzi walks creditors, investors, and the court through his perspective at the helm of BlockFi.

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