Crypto lender BlockFi filed for Chapter 11 bankruptcy on Monday! In the first week of November, BlockFi paused withdrawals from customers. The crypto lending platform had drawn down a $400 million line of credit from FTX US over the summer and was one of the first victims of the crypto contagion following the FTX collapse. Stuart Alderoty, General Counsel at Ripple, pointed the finger at the U.S. SEC:
Australian lawyer Bill Morgan responded to Alderoty. He said that consequently, the crypto assets of FTX/BlockFi investors that the SEC was supposed to protect were used, and the SEC received stolen funds. “Is receiving stolen funds a crime?”
In other words, the SEC may have weakened BlockFi financially to the point that the company had no choice but to store cryptocurrencies at FTX to keep it running, which may have been the reason for the collapse.