Crypto lending platform BlockFi, which had made a deal in July with FTX.US that included a possible acquisition, has paused withdrawals and requested no additional deposits
In a statement posted to Twitter on Thursday, BlockFi said that it would be unable to operate business as usual “given the lack of clarity around FTX.com, FTX US and Alameda.”
“We are shocked and dismayed by the news regarding FTX and Alameda. We, like the rest of the world, found out about this situation through Twitter,” said BlockFi.
The crypto lender secured a $400 million revolving credit facility from FTX.US earlier this year and was in talks to be acquired by the exchange at a variable price of $240 million.
The credit line to BlockFi came after the lender faced around $80 million in losses following Celsius’ bankruptcy, despite the company not having any exposure to Celsius.
The problems at BlockFi initially indicated that FTX’s troubles could hit its US entities, which were initially thought to be separate from the offshore exchange. (Indeed, Friday morning, FTX CEO Sam Bankman-Fried announced FTX.US would be filing for bankruptcy, along with FTX.com and related entities.)
In fact, this halt in operations comes a day after an announcement from Flori Marquez, the firm’s founder and COO, assuring users that all BlockFi products were fully operational due to its connection to FTX.US, not FTX.com.
“BlockFi is an independent business entity. We have a $400MM line of credit from FTX US (not FTX.com) and will remain an independent entity until at least July 2023,” said Marquez in a tweet on Tuesday.
Data from Nansen shows that the stablecoin balance on BlockFi had dropped to $4.6 million as of 9:00 pm ET Thursday.
The announcement further fueled fears that the contagion from FTX’s collapse has begun to spread across the crypto ecosystem.
“Can’t stress enough, get your coins off centralized exchanges/custodians immediately. Transfer now and wait for the dust to settle, can always send back later,” tweeted on-chain analyst William Clemente.
Update, Nov. 11, 2022, 2pm ET: Adds that, Friday morning, FTX.US announced it is filing for bankruptcy.