BlockFi, a cryptocurrency lender, has declared bankruptcy following the failure of over 100 FTX companies a few weeks ago. Puck News Silicon Valley reporter Theodore Schleifer joins CBS News to discuss the worldwide impact of the collapse of cryptocurrency exchange FTX https://www.cbsnews.com/video/why-the-collapse-of-cryptocurrency-exchange-ftx-could-have-a-global-impact/#x.
The failure of cryptocurrency exchange FTX hit the industry on Friday, February 22, when BlockFi declared bankruptcy. Originally founded in 2013 as a Bitcoin exchange under the name FTX, this cryptocurrency exchange was one of the largest at its peak. However, it was shut down in December 2018 after facing a multi-million-dollar loss due to vulnerabilities in its security systems.
The company’s founder blamed hackers for their financial loss and filed for bankruptcy soon after. It has been estimated that BlockFi will have to pay back $50 million owed to creditors. The collapse of the cryptocurrency exchange FTX has caused many investors and clients to lose money due to fraudulent activity.
According to the founder, things started going south when they noticed unauthorized transactions on the platform. After an internal investigation, they realized that hackers had compromised their systems. The company had used software to protect their cryptocurrency wallets, which was supposed to disable all withdrawals if there were any attempts at a breach.
However, this cryptocurrency exchange discovered that the hackers managed to get around their security systems and steal −126 Bitcoins from them. This was possible because of some vulnerabilities in the software used by the company, which allowed them to bypass the security codes and take control of all cryptocurrency wallets stored in BlocksFi’s vault.
After months of investigations and negotiations, BlockFi declared bankruptcy last week after discovering that their insurance policy would not cover their losses either. The founder blamed all their misfortune on the hackers and said they had no choice but to declare bankruptcy soon after. BlockFi has lost nearly all of its clients due to these developments and has been suffering from cash flow issues lately. This has led to their clients leaving this cryptocurrency exchange in droves.
According to a recent report by Silicon Valley’s Puck News, the collapse of cryptocurrency exchange FTX could have far-reaching ripple effects for the entire industry, as investors might be compelled to leave other cryptocurrency exchanges. This is because many users of BlocksFi were not using this particular platform for its trading services but rather for its lending facilities.
Dil Bole Oberoi
