The cryptocurrency lender BlockFi has halted client withdrawals on its platform as part of a broader cap on platform activity in the wake of the FTX collapse.
The company said in a tweet on November 11 that the “lack of clarity on the status of FTX.com, FTX US and Alameda” has prevented it from being able to operate normally.
Consequently, platform activity has been limited until the situation is clarified.
The company has also requested that customers not deposit to BlockFi wallets and interest accounts at this time.
— BlockFi (@BlockFi) November 11, 2022
This comes just a few days after a Twitter thread in which the founder and director of operations of BlockFi, Flori Márquez, assured users on November 8 that all BlockFi products were fully operational, since they had a credit line of USD 400 million from FTX US, which is an entity independent of the one affected by a liquidity crisis.
two) @BlockFi is an independent business entity. We have a $400MM line of credit from https://t.co/rFQz2hySwu (not https://t.co/oVC3gZQ6lb) and will remain an independent entity until at least July 2023.
— Flori Marquez (@FounderFlori) November 8, 2022
2) @BlockFi is an independent business entity. We have a $400 million credit facility from https://t.co/rFQz2hySwu (not https://t.co/oVC3gZQ6lb) and will remain a separate entity until at least July 2023.
Marquez’s comment that BlockFi “will remain an independent entity until at least July 2023” is likely a reference to the deal with FTX US that provided them with the credit facility, in which FTX US was provided with an option to acquire BlockFi for a variable price of up to $240 million.
Nevertheless, recent FTX US developments, in which a banner at the top of the FTX US website read “trading may stop on FTX US in a few days”, has raised questions about the financial impact the FTX crash has had in its United States division.
The cryptocurrency community has not taken well to the abrupt change in the language used by BlockFiwhich just 12 hours earlier had insured customers that “all cryptocurrency transactions, including withdrawals, would continue as normal.”
Kevin Paffrath, CEO of HouseHack and a YouTuber with 1.85 million subscribers, pointed to a similar U-turn in public comments from Sam Bankman-Fried in the lead up to FTX’s fall.
Blockfi 11 hours ago: withdrawals “will remain fully operational”
Blockfi 20 minutes ago: pausing withdrawals, can’t do business anymore.This is why trusting institutions is tough… Sam Bankman-Fried says “everything’s fine,” now going bankrupt. https://t.co/q8GRAhXFgA
— Meet Kevin (@realMeetKevin) November 11, 2022
Blockfi 11 hours ago: Withdrawals “will continue to be fully operational.”
Blockfi 20 minutes ago: pause on withdrawals, can no longer trade.
That’s why it’s hard to trust institutions… Sam Bankman-Fried says “everything is fine”, now he’s going bankrupt.
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