Cryptocurrency Lender BlockFi Stops Withdrawals After FTX’s Collapse

Following the collapse of FTX, cryptocurrency lender BlockFi said that it will be curtailing operations and unable to carry on business as usual. The business said in a tweet that it would halt customer withdrawals due to the “lack of information” around FTX’s present status. Additionally, it warned customers against making deposits to their interest or wallet accounts.

“We will share more specifics as soon as possible,” the company said. “… we intend to communicate as frequently as possible but anticipate that this will be less frequent than what our clients and other shareholders are used to.”

Tweet from BlockFi just two days before, founder and COO Flori Marquez tweeted that “all BlockFi products are fully operational,” adding that the company will remain autonomous at least through July of next year. BlockFi and FTX US announced their agreement to a transaction in July of last year, under which FTX US would give BlockFi a $400 million credit line and grant the cryptocurrency exchange the chance to purchase BlockFi. Various conditions would affect the acquisition’s price.

These conditions included BlockFi getting approval from the Securities and Exchange Commission (SEC) of the United States to run a yield-generating business there, accumulating at least $10 billion in customer assets by the time FTX US exercised its option, and earning a profit each year. FTX US would have to pay up to $240 million to buy the lender if these conditions were satisfied. BlockFi might have been sold for as cheap as $15 million if the conditions weren’t satisfied.

In her Twitter thread from Tuesday, Marquez seemed to be alluding to this transaction when she noted that BlockFi was an “independent business entity” and that the lender’s arrangement was with FTX US, not FTX international. The fact that FTX, the international business connected to FTX US, has a $10 billion hole in its books appears to have cast doubt on this acquisition.

FTX has stopped accepting withdrawals and is currently the focus of state and federal investigations. Sam Bankman-Fried, the founder of FTX, claims that FTX US is fine, but the business said on Thursday that it could stop trading soon and advised consumers to stop making deposits.

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