Crypto lending firm BlockFi is the latest to limit customer activity on its platform. Fearing a major liquidation event, the company has halted withdrawals.
Update Nov. 14, (20:30UTC): BlockFi has come out today with an announcement to all its users stating that the firm would be pausing its services. This comes after last week’s announcement that the firm had significant exposure to FTX.
The website now features a yellow statement on the top of its website saying:
“BlockFi is not able to operate business as usual. We have limited platform activity, including pausing client withdrawals as allowed under our Terms. We request that clients not deposit to BlockFi Wallet or Interest Accounts at this time.”BlockFi Website
On Nov. 11, BlockFi announced that it was “not able to operate business as usual.” It cited a lack of clarity regarding FTX, FTX.US, and Alameda as the reason.
It said until there is clarity, it will be limiting activity, including pausing withdrawals. It also requested that clients do not make deposits, though that would be highly unlikely given the current situation.
BlockFi claimed that its priority was to protect its clients and their interests. But that will not help those that now have assets locked and inaccessible on the platform.
BlockFi Blocks Finances
Remarkably, the move comes just days after BlockFi announced the re-launch of its crypto yield accounts in the U.S. The firm pulled the products following a crackdown by the U.S. Securities and Exchange Commission. It shelled out $100 million in fines leading to the reinstatement of the yield accounts.
Just four days later, BlockFi blocks customer withdrawals.
On Nov. 9, BlockFi founder and COO Flori Marquez said the firm had a $400 million line of credit from FTX.US. She reassured clients that it was not exposure to FTX.com, an independent entity.
However, fears of similar service or withdrawal limitations on FTX.US have started to spread.
On Nov. 10, Sam Bankman-Fried took to Twitter to offer an apology. After admitting that he “f**ked up,” SBF confirmed that it was only FTX International that was affected, adding:
“FTX US, the US based exchange that accepts Americans, was not financially impacted by this shitshow. It’s 100% liquid. Every user could fully withdraw (modulo gas fees etc).”
In August, BlockFi was named the fastest-growing privately-owned company in the United States. However, as seen by today’s action, it is not immune from the crypto contagion.
Crypto Markets Recover Slightly
Following a dump to their lowest levels for almost two years yesterday, the crypto market has started to recover marginally.
Total capitalization slumped to $830 billion on Nov. 10, sending them back to the same levels from January 2021. Since that new bear cycle bottom, $60 billion has reentered the markets pushing the total cap up 6% on the day to $890 billion.
Bitcoin reclaimed $17,000 and ETH was back over $1,200, but things are still very shaky in crypto land.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.