BlockFi Suspends Withdrawals After FTX Collapse

Reading Time: 2 minutes
BlockFi has paused withdrawals from its platform following the FTX collapse
The lending platform cited a need to “protect” users as their reason for doing so
FTX lent BlockFi $250 million earlier this year

BlockFi’s torrid 2022 continued this morning when it announced that it was halting withdrawals “until there is further clarity” over the FTX situation. BlockFi put the decision down to a desire to “protect our clients and their customers”, but the move has led to many assuming the worst – that BlockFi is caught up in the FTX mess and is now unable to pay out withdrawal requests. BlockFi borrowed $250 million from FTX in June to stay solvent after being hit with a $100 million fine by U.S. regulators, but it seems that its connection to the company goes deeper.

BlockFi “Not Able to Operate Business As Usual”

BlockFi announced its decision on Twitter, adding that it only found out the details on social media like everyone else:

pic.twitter.com/zNF1uP6evl

— BlockFi (@BlockFi) November 11, 2022

The statement that “we are not able to operate the business as usual” will deeply concern those with funds on the platform, as will the fact that BlockFi has taken that most terrifying of all steps and halted withdrawals.

BlockFi borrowed the $250 million from FTX after it agreed to pay $100 million to settle its case against the SEC and other regulators in June, which was augmented by a near $1 million fine by the State of Iowa shortly afterwards.

Users Not Fooled

BlockFi users were not to fooled into thinking that this was being done for their own protection, with many seeing past the facade:

> protecting our clients by not allowing them to withdraw

— dappdavid (@dappdavid99) November 11, 2022

“We are halting all withdrawals”

“We are protecting customers”

Bruh

— CryptoVinco (@CryptoVinco) November 11, 2022

Given the scale of FTX’s involvement in the lending and borrowing aspects of the crypto space, it’s clear that BlockFi will not be the last fish to get caught in its net. The Terra, Celsius and Three Arrows Capital collapses will have pushed many of these companies to the limit, with the FTX collapse potentially sending them over the edge.

The post BlockFi Suspends Withdrawals After FTX Collapse appeared first on FullyCrypto.

Related Posts

Court in China Recognizes NFTs as Virtual Property Protected by Law

A court in the Chinese city of Hangzhou has determined that non-fungible tokens, or NFTs, represent virtual property protected by the laws in the People’s Republic. The…

Cryptocurrency has become a playground for fraudsters

Currency speculation was once the preserve of banking institutions, governments, and investment funds. But with cryptocurrency, it’s being sold to the public as casino entertainment. News involving…

3 reasons why Ethereum price keeps rejecting at the $1,300 level

Traders are not sure if ETH will be able to hold the $1,200 level while the S&P 500 rapidly approaches the crucial 3,900 support and ETH derivatives…

North Korean Lazarus Group is targeting crypto funds with a new spin on an old trick

Microsoft and cybersecurity firm Volexity have traced a new version of AppleJeus malware to the hackers behind the Ronin exploit and numerous other online heists. Microsoft reports…

Sam Bankman-Fried hires defense attorney as US authorities probe FTX: Report

Mark Cohen was a former assistant U.S. attorney for the Eastern District of New York who was also on the defense team for the high-profile criminal case…

Strike Brings Lightning-Based Remittance Payments to Africa

Bitcoin payments platform Strike has now expanded to Africa, enabling instant and low-cost remittances to the continent by leveraging its new “Send Globally” feature. The tool, available…

Generated by Feedzy