The collapse of the cryptocurrency exchange threatens to spread to other crypto companies.

The Wall Street Journal reports that the crypto bank BlockFi is preparing to file for bankruptcy.

At the beginning of the week, the company admitted that FTX's bankruptcy had "significant" sums on fire.

In addition, the moneylender stopped all withdrawals.

Martin Hock

Editor in Business.

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This is not surprising given that FTX had signed an option to buy BlockFi in July when FTX boss Sam Bankman-Fried was still on the road as the great crypto savior.

Also directly affected is bankrupt crypto lender Voyager, whose assets FTX was looking to acquire for $1.4 billion.

Crypto hedge fund Galois Capital is $40-50 million on fire, while broker Genesis has needed a $140 million cash injection from its parent company after revealing an account at FTX was frozen with $175 million.

Curiously, the insolvent crypto lender Celsius, which had almost completely dissolved its business relationship with FTX in the run-up to bankruptcy, got away with it.

As recently as January, the deal was no less than $3.6 billion; it's currently $13 million, restructuring director Chris Ferraro said at a bankruptcy court hearing on Tuesday.

This was thanks to the strategy of making oneself independent of other crypto platforms.

Crypto exchanges under pressure to justify themselves

Many in the industry assume that there will be further bankruptcies, including among heavily leveraged Bitcoin producers (miners).

Michael Novogratz, founder of crypto investor Galaxy Digital and hedge fund Fortress, which faltered in the financial crisis, told Bloomberg news agency that the crisis could get worse.

Meanwhile, many crypto companies are struggling to claim they are in solid shape.

For example, the founder of the Japanese crypto exchange bit Flyer, Yuzo Kano, told the Bloomberg news agency that they had not done any business with FTX and that there was no impact.

Kris Marszalek, head of crypto exchange Crypto.com, also stressed that his company has a strong balance sheet.

Rumors had previously surfaced that there were problems with this trading platform as well.

The Austrian crypto exchange Bitpanda had already announced on Tuesday that it had commissioned a special audit, which should ultimately prove that the deposits held were available.

Bankman-Fried could return to the US

Meanwhile, the Bahamas-based central company of Bankman Fried's empire, FTX Digital Markets Ltd., has also filed for bankruptcy in the United States under International Corporate Law (Chapter 15).

American preliminary insolvency administrators can thus gain access to information about the company.

Authorities in both countries are said to be talking about bringing Bankman-Fried to the United States for questioning.

He is currently cooperating with the authorities in the Bahamas, also through personal talks.

This is not a matter of course for the crypto scene.

Allegedly responsible for the collapse of stablecoin Terra, Do Kwon continues to evade South Korean authorities.

Bankman-Fried tweeted on Wednesday that American crypto exchange FTX US had sufficient funds to pay out all customers as of November 7.

However, he acknowledged that not everyone necessarily sees it that way.

The “Krypto King” polishes his crown

There is still no concrete information about the rescue fund for ailing crypto companies that Binance boss Changpeng “CZ” Zhao promised on Monday and which calmed the crypto market.

However, Zao has now announced that there is great interest from investors to participate in the fund.

Zhao, who some observers have blamed for FTX's collapse, is currently apparently trying to be seen as a benefactor of the scene via Twitter, the crypto industry's favorite medium of communication.

However, there are no official statements from the company.

Zhao had at least contributed to a run on deposits at FTX with a tweet on November 6 that he wanted to sell all holdings in the FTX token FTT, which was then worth more than half a billion dollars.

"CZ" knew exactly that it would trigger an avalanche, said Max Gokhman, chief investment strategist at asset manager AlphaTrAI.

Zhao has now admitted some responsibility on Twitter, but takes the position that he did not expect a reaction on this scale.

He apologizes for poking a bubble, but five years from now you will see that the industry has become stronger as a result.

Binance also never short-sold the FTX token FTT, but rather still owns many of the tokens.

You will now work with other industry companies on common business standards.

Transparency must be improved in close cooperation with regulators

While Zhao speaks of a bailout fund, he doesn't seem to think much of helping out crypto lenders.

A number of these companies have been looked at over the past few months, but most only take money from users and pass it on, so there is a lack of intrinsic value.

Zhao also acknowledged that neither the bailout fund nor the idea of ​​an industry association came from him, but from co-founders and regulators.