In brief
- BlockFi will keep customer withdrawals paused as it figures out a path forward after FTX’s collapse last week.
- The crypto lending platform took a $400M line of credit from FTX US this summer.
Crypto lending and trading platform BlockFi paused customer withdrawals last week amid the collapse of FTX and associated hedge fund Alameda Research, citing “lack of clarity” on the situation.
Today, BlockFi told customers withdrawals are still paused, citing a "significant" impact from the fallout of FTX’s demise.
In an email to customers, BlockFi denied "rumors" that a majority of its assets were tied up in FTX, but acknowledged “significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX US.”
As a result, BlockFi continues to pause withdrawals and also asked customers not to submit any deposits to their accounts.
That means BlockFi users can't get their money out or put money in, at a time when all centralized exchanges and crypto brokers are under the microscope and customer jitters are high.
“There are a number of scenarios that may be available to us, and we are doing the work now to determine the best path forward,” the email reads. “BlockFi has the necessary liquidity to explore all options and we have engaged expert outside advisors that are helping us navigate BlockFi’s next steps.”
BlockFi became heavily reliant on FTX over the summer when it took a $400 million line of credit from FTX US and laid out terms for a potential acquisition by FTX. BlockFi neared its own liquidity crisis over the summer after the Terra-triggered crypto crash and narrowly avoided the fates of Celsius, which declared bankruptcy, and Voyager, which Alameda bailed out before it declared bankruptcy.
FTX, FTX US, and Alameda Research filed for voluntary Chapter 11 bankruptcy protection on Friday, just three days after acknowledging a liquidity crisis as users withdrew assets en masse and FTX’s FTT token rapidly lost value. Binance said last Tuesday that it would acquire FTX, pending due diligence, but then changed course on Wednesday.