- BlockFi a cryptocurrency company filed for bankruptcy
- Cryptocurrency generally bearish for the year
- Cryptocurrency slump impact on Zimbabwe
BlockFi cryptocurrency company is the latest casualty in the crypto business following the collapse of Sam Bankman-Fried’s FTX Bahamas-based company. On Monday, Nov. 28, BlockFi filed for bankruptcy protection and announced the beginning of a restructuring process to stabilize its operations and increase value for all of its shareholders and customers. It has voluntarily filed for Chapter 11 to safeguard client value and get back on track.
BlockFi will endeavor to recover all debts due to the company by counterparties like FTX and other related corporate groups as part of the restructuring process. However, BlockFi is already anticipating a delay in its recovery efforts given that FTX is also bankrupt.
When FTX failed, the BlockFi management team and board of directors acted right away to safeguard customers and the business.
On November 10, the bitcoin startup from New Jersey revealed that it had stopped customer withdrawals before declaring bankruptcy. At the time, BlockFi claimed that this was because of the company's "significant exposure" to the FTX exchange and its sibling hedge fund Alameda.
In the most recent development, BlockFi reportedly sued FTX's founder, Sam Bankman-Fried, over shares at Robinhood, according to the Financial Times. A few days before the demise of FTX, Bankman-Fried pledged shares as collateral and filed for bankruptcy protection. As part of that filing, it filed a complaint against the "Crypto King" to take possession of the shares.
In reality, cryptocurrency is facing a crisis of confidence after popular crypto exchange FTX filed for bankruptcy.
Cryptocurrency prices started to fall in May after TerraUSD, a stablecoin that was meant to remain constant with the dollar, lost the majority of its value in a matter of days, wiping out almost $60 billion in investor cash. The coin's inventor, Do Kwon, is currently wanted by Interpol.
Three Arrows Capital, a cryptocurrency hedge firm, lost its $10 billion in assets due to the collapse. Kyle Davies and Su Zhu, the company's founders, have not been found by authorities.
The most well-known cryptocurrency, Bitcoin, is down 74% from its peak last year, but other coins have been hammered even worse.
The potential for decentralized finance to reduce remittance costs was recently extolled by Zimbabwe's finance minister. But is the nation prepared to change its position on cryptocurrency? The present downturn will continue to undermine people's confidence in cryptocurrencies because the government has not yet recognized cryptocurrencies as an asset class.
The adoption of cryptocurrencies in the nation will be slow based on what has previously occurred, where people lost millions in pyramid schemes and were unable to reclaim their funds. Zimbabwe is more of a laggard market, thus it will be challenging for many people to accept the use of cryptocurrencies on a wide scale.
In summary, more can be done to protect those who trade cryptocurrencies, and the approval and licensing of regulated exchanges would help the market become more transparent and secure.
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