BlockFi Halts Withdrawals Citing ‘Lack of Clarity’ on FTX Situation

BlockFi, a cryptocurrency lending company, has suspended withdrawals on its platform, citing the uncertainty of the current situation of the crypto exchange, FTX. Additionally, the lending platform asked clients to refrain from depositing in their wallets or interest accounts.

“Given the lack of clarity on the status of FTX.com, FTX US, and Alameda, we are not able to operate business as usual,” BlockFi stated in an announcement released on Friday. “Our priority has been and will continue to be to protect our clients and their interests.”

BlockFi received a $400 million credit facility from FTX US last July, giving the exchange right to acquire the lending platform. The terms of the acquisition deal would depend on specific performance terms.

FTX US still looks to be immune from the troubles of FTX.com. However, the situation is changing frequently, bringing more concerns for Sam Bankman-Fried and his companies.

“Until there is further clarity, we are limiting platform activity, including pausing client withdrawals as allowed under our Terms. We will share more specifics as soon as possible,” the company added.

”We intend to communicate as frequently as possible but anticipate that this will be less frequent than what our clients and other shareholders are used to.”

pic.twitter.com/zNF1uP6evl

— BlockFi (@BlockFi) November 11, 2022

BlockFi’s U-Turn

The latest decision of BlockFi came only two days after its Founder and Chief Operating Officer, Flori Marquez, assured that “all BlockFi products are fully operational.” She even stressed on BlockFi being an independent entity.

3) We are processing all client withdrawals in line with our Terms of Service. To date, BlockFi has aimed to deliver all client withdrawals faster than our Terms of Service. https://t.co/HR6QC8Ih7w

— Flori Marquez (@FounderFlori) November 8, 2022

BlockFi, like most cryptocurrency lending platforms, is a company with opaque operations. The company became the first to settle with US federal and state regulators, paying a total of $100 million.

Other crypto lending platforms disclosed their exposure to FTX after the exchange troubles started. While major platforms like Coinbase and Kraken confirmed minimum exposure to FTT tokens, Robinhood, of which a 7.6 percent stake is held by Sam Bankman Fried, said it has no exposure to FTX, FTX US or Alameda.

Meanwhile, Sequoia Capital, a venture capital invested in FTX, took a drastic move of writing off its investment and sister fund of more than $210 million into FTX.com.