Crypto Lender BlockFi Pauses Withdrawals Amid FTX, Alameda Research Liquidity Crisis

BlockFi has done so given the lack of clarity on the status of FTX.

Written by Shomik Sen Bhattacharjee, Edited by Richa Sharma | Updated: 11 November 2022 17:11 IST

Crypto Lender BlockFi Pauses Withdrawals Amid FTX, Alameda Research Liquidity Crisis

Photo Credit: Facebook/ BlockFi

BlockFi has promised to communicate as frequently as possible

Highlights

BlockFi did not explicitly state whether it had financial exposure to FTX
BlockFi has a $400 million loan currently from FTX US
The collapse of FTX continues to reverberate across the industry

Crypto lending firm BlockFi has announced that it was “not able to operate business as usual," citing a lack of clarity regarding FTX, FTX.US, and Alameda Research as the reason. The leading cryptocurrency lending platform says that until there is clarity, it will be limiting activity including pausing withdrawals. It also requested that clients do not make deposits, though that would be highly unlikely given the current situation. BlockFi claimed that its priority was to protect its clients and their interests.

The company posted an update to its Twitter account indicating that it will halt services. "We are shocked and dismayed at the news regarding FTX and Alameda," BlockFi wrote. "We, like the rest of the world, found out about this situation through Twitter."

pic.twitter.com/zNF1uP6evl
— BlockFi (@BlockFi) November 11, 2022

Over the past several days, a substantial portion of Alameda Research's holdings was revealed to be tied to FTX's FTT token rather than the traditional assets. That controversy led to a bank run on FTX. To gain funding and protect against further losses, FTX tried to arrange an acquisition with Binance that ultimately fell through.

The fallout from the failed deal has continued into Thursday as CEO Sam Bankman-Fried posted an admission of failure.

Samsung Wins Patent for a Tri-Fold Smartphone With Specialised Barrier Layer for Improved Durability

BlockFi indirectly referred to these events as the reason for its service suspension. "Given the lack of clarity of the status of FTX.com, FTX US, and Alameda Research, we are not able to operate business as usual," it wrote.

The company said that though it will provide updates on the situation, those updates will be "less frequent than what our clients and other stakeholders are used to."

BlockFi did not explicitly state whether it had financial exposure to FTX or its related companies. Earlier this week, BlockFi COO and co-founder Flori Marquez said that the company had a $400 million (roughly Rs. 3,200 crore) loan from FTX US rather than FTX. It is unclear whether BlockFi had other exposure.

Bank of Korea's CBDC Tests Reveal Limitations in Blockchain Tech

Incidentally, the competing crypto lending firm Nexo said on Tuesday that it had narrowly avoided losses from FTX's collapse. Nexo withdrew certain balances just prior to FTX's collapse and is still operating as usual.

Are the Pixel 7 and 7 Pro the best in their segment? We discuss this on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

Affiliate links may be automatically generated - see our ethics statement for details.

Comments

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.