BlockFi halts withdrawals amid FTX and Alameda debacle

    12 Nov 2022

    New Jersey-based exchange BlockFi informed customers that it would be “limiting platform activity” and paused withdrawals amid the crypto market turmoil caused by FTX collapsing. In June, BlockFi secured a $400 million loan from FTX and potential acquisition terms, hoping the new credit line could help them remain afloat.

    “We, like the rest of the world, found out about this situation through Twitter,” BlockFi wrote in a letter. “We are shocked and dismayed by the news regarding FTX and Alameda.”

    BlockFi claimed that given the lack of clarity on the status of FTX, FTX US, and Alameda, “we are not able to operate business as usual.” As a result, platform activity and withdrawals will be limited. The firm also advised customers not to make deposits to hosted wallets and accounts.

    BlockFi acknowledged that it will communicate less frequently than its clients and stakeholders are used to.

    In July, BlockFi offered employees buyouts to reduce headcount after cutting 20% of its staff the month before. These buyouts came weeks after finalizing a $400 million loan and potential acquisition terms with FTX in June.

    BlockFi claimed to have a strong balance sheet at the time, calling itself well-positioned for long-term stability.

    “The proceeds of the credit facility are intended to be contractually subordinated to all client balances across all account types (BIA, BPY & loan collateral) and will be used as needed,” BlockFi CEO Zac Prince said.

    He also lauded the efforts of his team during the ongoing volatility in the crypto market and stated that the new line of credit will be put toward safeguarding users’ funds across all accounts type.

    The agreement also opened the door to further collaboration between BlockFi and FTX.

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