Crypto lending platform BlockFi announced it was halting withdrawals Thursday night in the wake of the collapse of crypto exchange FTX.
“We are shocked and dismayed by the news regarding FTX and Alameda,” BlockFi said in a tweet. “We, like the rest of the world, found out about this situation through Twitter.”
BlockFi said that due to the “lack of clarity” regarding FTX and Alameda, “we are not able to operate business as usual,” and that until there is “further clarity, we are limiting platform activity, including pausing client withdrawals.”
The company asked clients not to deposit into BlockFi Wallet or Interest Accounts at this time, and said it will share more specifics “as soon as possible,” though it warned it likely would communicate “less frequently” than what its clients and stakeholders are used to.
In June, BlockFi received a $250 million bailout from FTX to help keep it afloat.
FTX, once valued at $32 billion, collapsed this week under a liquidity crisis, and faces a shortfall of up to $8 billion, according to several media reports. Without a cash injection, the company might plunge into bankruptcy, according to a Bloomberg report.
FTX founder and CEO Sam Bankman-Fried reportedly extended about $10 billion in loans to its affiliated trading firm Alameda Research — amounting to about half of FTX’s customer assets of $16 billion, according to the Wall Street Journal.
“I fucked up, and should have done better,” Bankman-Fried said in a tweet Thursday, saying he had, among other things, misread the use of margin on the platform.
Late Thursday, it was revealed that Alameda appeared to have shorted the stablecoin Tether, according to blockchain data.
The FTX fiasco has spread fear of a “contagion” across the broader crypto industry, and sent the price of bitcoin
at one point to its lowest level since November 2020.