BlockFi halts withdrawals amid FTX crisis

The lending platform BlockFi said it would not be able to operate normally and would restrict operations due to the lack of clarity regarding the status of FTX and Alameda Research.

pic.twitter.com/zNF1uP6evl

— BlockFi (@BlockFi) November 11, 2022

The company halted withdrawals. BlockFi also urged users to refrain from depositing into wallets and into interest-bearing accounts.

“We are shocked and alarmed by the news surrounding FTX and Alameda. We are like the rest of the world, which learned about this situation via Twitter. […] Our priority remains protecting clients and their interests,” the platform team said.

She pledged to keep users informed as frequently as possible.

On November 8, BlockFi founder Flori Marquez assured that all of the company’s products were operational, and the business did not depend on Sam Bankman-Fried’s firms.

In July the platform entered into an agreement with FTX US. The terms provided for the US unit being loaned $400 million with an option to purchase the company for $240 million.

On November 10, Bankman-Fried stated that the liquidity crisis had not affected FTX US. However the American platform posted on its site an announcement about possible cessation of trading in the coming days. Traders were advised to close their positions; withdrawals remain possible.

As with BlockFi, a number of other large crypto firms sought to distance themselves from the collapsing FTX.

On November 9 Genesis Trading stressed that it continues normal operations and does not own “centralized-exchange tokens.” The following day, Barry Silbert’s Digital Currency Group subsidiary said that about $175 million of funds were locked on its FTX account.

As part of our goal in providing transparency around this week’s market events, the Genesis derivatives business currently has ~$175M in locked funds in our FTX trading account. This does not impact our market-making activities.

— Genesis (@GenesisTrading) November 10, 2022

Also on November 9, Crypto.com CEO Kris Marszalek wrote that the crisis’s impact on the platform’s operations was negligible.

A day later the company suspended deposits and withdrawals in USDC and USDT on the Solana blockchain. Marszalek noted that FTX had been the most important venue for these stablecoins in the blockchain ecosystem.

As reported, U.S. regulators have begun investigating FTX, according to media. The U.S. Department of Justice has also taken an interest in the exchange’s activities.

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