As BlockFi filed for bankruptcy, members of the crypto community reacted with mixed feedback as another platform fell.
Podcaster Matt Odell offered a different explanation for BlockFi’s bankruptcy filing despite the company citing the FTX contagion as the cause. According to Odell, the lending platform failed because it lent customer money to risky traders who used leverage carelessly.
Leverage kills, trusted third parties are security holes, and this is a story as old as Bitcoin, he continued. Mario Nawfal said in a tweet that many people in the community had anticipated BlockFi’s bankruptcy filing.
Nawfal asserts that the platform for lending and yield-earning, which was only just able to survive after the Voyager and Celsius failures, has come to an end with the bankruptcy filing.
Many people lost money in the process, and some of them brandished pitchforks in the direction of businessman and podcaster Anthony Pompliano who had introduced them to the lending platform.
After listening to Pompliano’s podcast and hearing BlockFi recommended, a Twitter user claimed they had lost the majority of their savings. Another member of the community claimed to have diversified their portfolio by investing some money in FTX, BlockFi, and Bitcoin (BTC $16,464) that Pompliano suggested.
Two of the three, they said, have already reached zero. Erik Voorhees, the founder of ShapeShift, also responded to news that BlockFi’s creditors include the Securities and Exchanges Commission (SEC).
In order to assist the users who they should be protecting, Voorhees suggested that the SEC return the $70 million that they stole from BlockFi. In the meantime, Emergent Fidelity Technologies, the holding company of former FTX CEO Sam Bankman-Fried, has been sued by the crypto lending platform. BlockFi wants to recover the Robinhood shares that Bankman-Fried pledged as security earlier this month.