Wait a minute, the week is over. Unfortunately, this latest date still brings bad news to the crypto industry: BlockFi has announced that it will pause recording. As a result, customers are currently unable to send crypto from the lending platform to their wallets.
BlockFi pauses services
Lending company BlockFi shared an update on its official Twitter account, indicating that it was temporarily suspending its services. BlockFi is not a traditional bank, lending in Bitcoin instead of dollars or euros.
The company says it will limit platform activity and suspend customer records. It also urged users not to deposit funds into wallets or savings accounts but did not specifically mention voiding deposits.
“Shocked and appalled by the FTX and Alameda news,” BlockFi wrote. “We were informed of the situation through Twitter, as in the rest of the world.”
FTX and Alameda are guilty
If you’ve been living under a rock this week (thankfully bitcoin suddenly got cheaper), crypto exchange FTX and mutual fund Alameda Research have pulled off a shady fundraising trick by founder Sam Bankman-Fried. are closely related through In recent days, it has been noted that a significant portion of Alameda Research’s holdings is tied to his FTT tokens in his FTX rather than traditional assets.
This controversy led to the FTX bank run. To secure funds and protect itself from further losses, FTX tried to arrange a takeover with Binance, which ultimately failed.
BLOX editor Thom Derks warned about the domino effect two days ago. He looked at all the parties invested by the bankrupt cryptocurrency exchange FTX and specifically explained BlockFi.
US FTX has no problem
BlockFi cites these events as reasons for the outage. “Due to the uncertainty of the status of FTX.com, FTX US, and Alameda [Research], we are unable to conduct business as usual.”
FTX is divided into international offices and local offices, including the US. They are compelled to do so by regulations in various countries. According to Sam Bankman-Fried, FTX US is fine.
BlockFi has not specifically stated whether it has any financial exposure to FTX or its affiliates. Earlier this week, BlockFi CEO and co-founder Flori Marquez said the company received a $400 million loan from FTX US, not FTX. BlockFi is unclear if she has any other loans on FTX.
Lack of liquidity
Shortly after the collapse of Terra Luna, Voyager, and other major political parties last summer, rumors circulated that BlockFi was illiquid. One of his failed parties was Three Arrows Capital, a large institutional investor in BlockFi.
As such, BlockFi ran out of funding from Three Arrows Capital and had liquidity issues. The lenders have since shared their transparency report and new guidelines.
BlockFi has decided to keep at least 10% of its inventory owed to customers and return it to users immediately. You must repay at least 50% of the total amount within one week and at least 90% of the total amount within one year. The new policy was made possible in part by a $400 million loan from FTX. According to Marquez, the credit remains as it is for his FTX in the US, not his FTX internationally.
However, FTX also backed BlockFi with a $250 million loan in June this year, though it’s unclear if that will affect the US bureau.
BlockFi and Marquez are all right, but it doesn’t inspire confidence that the recording has stopped. And as the cliché says:
Where there is smoke, there is fire.
