Blockfi Pauses Customers Withdrawals, Cites ‘Lack of Clarity’ on FTX’s Status as Cause

Blockfi, a cryptocurrency lending platform, has introduced that it’s limiting the operations of its platform and pausing buyer withdrawals. The firm issued a letter the place it states that this determination was brought on by the “lack of clarity” on the present state of FTX, which had beforehand introduced an funding of $250 million within the platform to bolster its stability sheet.

Blockfi Limits Platform Activity, Pauses Customer Withdrawals

Blockfi, one of many main cryptocurrency lending platforms, introduced on Nov. 10 at 8:16 p.m. (ET) it was limiting the exercise on its platform and pausing buyer withdrawals because of the liquidity crunch that FTX has been experiencing. The firm cited the “lack of clarity” of the standing of the trade as the primary motive behind this decision.

In an announcement, the corporate defined they came upon in regards to the FTX scenario on Twitter, feeling “shocked and dismayed” by the event of this difficulty. Furthermore, the corporate declared that it couldn’t proceed working usually, speaking it was limiting its companies till additional discover.

The firm had beforehand informed that transactions slated to occur on Nov. 11 have been going to be delayed to Nov 14 because of its banking companion, Silvergate Bank, observing the federal vacation of Veterans Day.

Finally, Blockfi said that it’s going to preserve prospects knowledgeable about additional developments. The information follows the statements made by Blockfi co-founder Flori Marquez. “All Blockfi products are fully operational,” Marquez tweeted on Nov. 8, 2022. “Blockfi is an independent business entity. We have a $400MM line of credit from [FTX US] (not FTX.com) and will remain an independent entity until at least July 2023,” Marquez added.

FTX’s Deal

The firm had secured a $250 million credit score line with FTX in June, that will be used to bolster its stability sheet. On the future of those funds, Blockfi’s cofounder Zac Prince said:

The proceeds of the credit score facility are supposed to be contractually subordinate to all consumer balances throughout all account sorts (BIA, BPY & mortgage collateral) and shall be used as wanted,

The settlement signed between the 2 firms gave FTX the choice to acquire Blockfi at a worth of as much as $240 million. The firm, which had additionally laid off 20% of its employees in June as a consequence of the cryptocurrency winter, had additionally suffered from publicity to the downfall of Three Arrows Capital, shedding $80 million.

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