This week started off like the past few have and many will in the future 鈥� with a crypto company admitting financial difficulties thanks to the spectacular collapse of 鈥檚 exchange.

Crypto lender filed for Chapter 11 bankruptcy on Monday. In July, FTX gave BlockFi a $400 million revolving credit facility that included an option to buy BlockFi for up to $240 million. Earlier this month, BlockFi suspended withdrawals on its platform after FTX鈥檚 troubles came to light.

While also blaming crypto鈥檚 down year for the company’s predicament, Mark Renzi with the 鈥� the proposed financial advisers for the company 鈥� emphasized FTX鈥檚 implosion was 鈥渁 major cause鈥� in BlockFi鈥檚 bankruptcy.

The 41-page described FTX鈥檚 fall as a 鈥渄eath spiral,鈥� and BlockFi鈥檚 inability to access its credit facility forced the company to seek bankruptcy protection.

BlockFi had already drawn $275 million on the facility, and on Nov. 8 requested an additional $125 million, the filing states. However, by that time news of FTX鈥檚 troubles had spread and FTX did not honor the request. Shortly thereafter, Bankman-Fried鈥檚 other trading firm defaulted on $680 million of collateralized loan obligations it owed to BlockFi.

A new path forward

BlockFi is now seeking to 鈥渟tabilize鈥� its business through restructuring, and Renzi鈥檚 affidavit states the company does 鈥渘ot face the myriad issues apparently facing FTX.鈥� However, it seems like a hard row to hoe as the FTX bankruptcy likely will only muddle up BlockFi鈥檚 attempts.

It鈥檚 a far descent for BlockFi, which raised $350 million at a valuation of $3 billion in March 2021 and followed that up four months later with a $500 million round at a $4.8 billion valuation.

More stories about FTX鈥檚 wave of destruction will continue to follow in the next several months. On Tuesday, some Web3 unicorn companies FTX invested in at high valuations may have trouble attracting investors willing to pay the same for FTX鈥檚 stakes.

The story really is just beginning.

Read our coverage of all the FTX-related events and more below:

• Just Like FTX, FTX Ventures Went Big 鈥� And Fast 鈥� When It Came To Investing
• After The FTX Collapse, This May Be A Good Time For VCs To Start Using 鈥楥ommon Sense鈥� Again
• FTX Collapse Will Reverberate Throughout The VC World For A Long Time
• Mergers & Money: FTX-Induced Crypto Contagion Likely Only Starting
• BlockFi Files For Bankruptcy As FTX Contagion Spreads

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