Another Shoe About to Drop

BlockFi preps possible Chapter 11 bankruptcy protection filing: WSJ

Last week, BlockFi’s founder and chief operating officer, Flori Marquez, had said on Twitter that all of the company’s products were operational and client withdrawals were being processed. Marquez had also said that BlockFi’s credit line was from FTX US and that BlockFi would be an independent entity until at least July.

Optimistic.

California’s Department of Financial Protection and Innovation suspended BlockFi’s lending license on Friday as the state regulator investigates the crypto lender. The suspension will last for at least 30 days.

To anybody still holding exposure to loans, whether as borrower or lender, best look very carefully at your exact liabilities. This is going to ripple across all lending platforms.

Just to add that BYT has never had any exposure to crypto lending platforms. Given the insane yields within Defi, lending just seemed to increase my exposure without commensurate yield gain. Sure, yield farming is a form of lending, but I find the parameters easier to read. However, as we saw with LUNA, the network of interacting contracts can cause contagion well beyond the original collapse. This is true of every form of crypto investing that requires handing over temporary custody of your assets.