Behind BlockFi’s Bankruptcy: A Dive into Risk Management Failures

The Unsustainable Growth Model

In the world of crypto lending, BlockFi initially dazzled investors and clients alike with promises of high yields and responsible growth. However, all that glitters isn’t gold, as we now know from the company’s recent Chapter 11 bankruptcy filing. It seems the only thing truly sustainable at BlockFi was the mounting risk that employees were explicitly discouraged from putting into writing.

A Culture of Silence

A former employee shed light on what they termed a “culture of silence” at BlockFi, where discussing potential risks could lead to serious repercussions. The company allegedly fostered an environment where expressing concerns was akin to committing career suicide. Imagine the scene: a board meeting full of buzzwords like ‘disruption’ and ‘innovation,’ while in the corner sits a Risk Manager, sweating bullets and fearing for their future.

The Danger of Concentrated Borrowing

BlockFi’s internal assessments reportedly warned that their borrower pool was overly concentrated among a small number of