It is very obvious that the sad fall of FTX is dragging countless victims to their deaths. BlockFi is the most recent victim of this trend. This platform for cryptolending has very little in the way of risk control or risk mitigation procedures. As more cryptocurrency projects are anticipated to declare for bankruptcy, it does not appear that the crypto winter will ease very soon.
Because of the interconnected nature of the cryptoverse, certain people have predicted that this death spiral will spread like a contagion. And there is no question that this is the reason why Celsius, FTX, Three Arrows Capital, and other financial institutions like these have been put on the chopping block.
The enormous asset contagion risks associated with the crypto ecosystem are highlighted by BlockFi’s Chapter 11 bankruptcy filing, according to Fitch Ratings’ Monsur Hussain.
Because of its exposure to FTX through loans to Alameda and because it trades cryptocurrencies on FTX, BlockFi is going to be hurt particularly badly by the current liquidity crisis. Imagine that with assets and liabilities between one billion and ten billion US dollars, BlockFi will find it impossible to survive the terrible times inflicted by Sam Blakeman Fried, a presumably authentic and altruistic prophet of the cryptocurrency faith.
It is more disturbing when you consider the number of people affected, which is more than 100,000 people, as well as the negative impact of laying off more than 290 employees!
Ankura Trust, the United States Securities and Exchange Commission, Bain Capital Ventures, Tiger Global, and many other major companies and organizations are among the many notable victims of this catastrophe.
Would the use of cryptography be able to survive this period if it continued to come under attacks?
