As we all know, in a slew of very unfortunate events, which some call “the coldest crypto winter on record” (but we never know) crypto lending platform BlockFi filed for Chapter 11 bankruptcy on Monday, November 28. BlockFi is also suing its former top executive, Sam Bankman-Freed. The lawsuit was based on Robinhood shares (the former CEO of FTX owned a 7.6% stake), which he allegedly promised to the creditor as collateral. BlockFi’s bankruptcy filing shows that the company’s largest disclosed client has a balance of nearly $28 million.

According to the platform, it has $256.9 million on hand, which is hoped to provide “sufficient liquidity” to support “certain operations” during the restructuring process. The largest creditors are Ankura Trust Company, LLC (outstanding liabilities of approximately $729 million), West Realm Shires Inc. ($275 million) and the US Securities and Exchange Commission ($30 million). The names of the rest are not revealed.

Just a couple of months ago, it was hard to imagine that the vast and rapidly growing business empire of FTX would collapse like a house of cards, and its founder, Sam Bankman-Fried (SBF), would lose his multibillion-dollar fortune at a wind blow. The root cause of the collapse of the SBF business empire was the high-risk operations of the trading firm Alameda Research, which were carried out at the expense of client funds on the FTX exchange. Lack of transparency in management accounting, poor risk management, and dubious investments have led to a huge hole in the balance sheet and the subsequent bankruptcy of once-prosperous firms.

The founder of the FTX exchange and Alameda Research, Sam Bankman-Fried, by the age of 30, entered the TOP 100 influential people according to TIME and ranked second in the Forbes ranking of the richest representatives of the blockchain and cryptocurrency industry. In the summer of 2021, FTX raised $900 million in funding, which was subsequently raised to $1 billion. In January 2022, the exchange received $400 million in a Series C round, and the company's valuation reached $32 billion. Then the estate of SBF was estimated at $24 billion, and his plans were truly far-reaching. For example, Bankman-Fried at some point did not rule out the possibility of buying Goldman Sachs and CME Group (!). But, he said, only after the exchange take over its direct senior competitors – Coinbase and Binance.

The head of FTX promoted the platform as a reliable storage not only among external users, but also in the team. As a result, many employees deposited their salaries on the exchange immediately after receiving them. Employee bonuses usually consisted of FTX shares and exchange utility tokens (FTT), which were also listed on one of the world's largest crypto platforms.

In October 2021, the company bought out its stake owned by Binance. According to the insider, Bankman-Fried and Chief Product Officer Ramnik Arora offered employees to purchase the stock at a 50% discount.

The current situation is, of course, very unfortunate with a vivid spectrum of far-reaching consequences, and not only for FTX itself. Moreover, in this case, it is already the U.S. registered company which went out of business so quickly – representing a true headache for SEC’s Chairman Gensler, who has been already under pressure by the Congress concerning his slow pace of regulatory actions deemed necessary to introduce to the crypto industry in order for the latter to comply with the U.S. Securities Law. After the as much unfortunate story with LUNA/Terra back in May, there were no any reminiscent issues with tokens as such, but the bankruptcy of companies is a real scourge of time. True, in fairness, it must be added that here the crypto industry does not look much worse than all the small-cap high-tech universe that is now failing the audits and shedding exchange listings like never before. It is essential, therefore, to apply an integrated approach to assessing the situation across the entire fintech, and not to make excessive fingerpointing towards crypto as a “root cause of all problems”! The collapse of FTX and Alameda had a negative impact on many other companies in the industry and the general state of the market, which is unlikely to recover soon after the incident.