BlockFi Suspends Withdrawal of Consumer Funds

BlockFi was affected by the fall of FTX. (Photo; Doc. CryptoMart)

JAKARTA – Crypto lending company BlockFi has reportedly suspended the withdrawal of customer funds from the platform. The company has also limited its platform operations. The condition was announced by BlockFi directly because it was related to the FTX condition.

BlockFi issued a letter in which it stated that this decision was due to a "lack of clarity" on the current state of FTX, which had previously announced a USD 250 million investment in a crypto lending platform to strengthen its balance sheet.

As one of the leading cryptocurrency lending platforms, BlockFi officially issued an announcement on November 10 to limit activity on its platform and temporarily halt customer withdrawals as a result of the liquidity crisis that FTX has experienced. The company cited a "lack of clarity" on the status of the exchange as the main reason behind this resolution.

In an announcement, the company explained that it learned about the FTX situation on Twitter, feeling "shocked and disappointed" by the development of the matter. Further, the company stated that they were unable to continue operating normally, communicating that they were limiting their services until further notice.

According to a recent report, the company had previously announced that transactions scheduled to take place on November 11 would be postponed to November 14 as its banking partner, Silvergate Bank, observes the Veterans Day federal holiday.

Finally, Blockfi stated that they will keep customers informed of further developments. The news follows a statement made by Blockfi co-founder Flori Marquez. "All Blockfi products are fully operational," Marquez tweeted on November 8, 2022.

"Blockfi is an independent business entity. We have $400 billion in credit flows from [FTX US] (not FTX.com) and will remain an independent entity until at least July 2023," added Marquez.

According to Bitcoin.com News, the company secured a $250 million line of credit with FTX in June, which it will use to strengthen its balance sheet.

“The proceeds from the credit facility are intended to be contractually under all client balances across all account types (BIA, BPY & loan guarantees) and will be used as needed,” said BlockFi founder Zac Prince.

The agreement signed between the two companies gives FTX the option to acquire BlockFi for up to US$240 million. The company, which also laid off 20 percent of its staff last June as a consequence of the cryptocurrency winter, also suffered from exposure to the crash of Three Arrows Capital, which led to the loss of $80 million in funds.