BlockFi pauses withdrawals amidst FTX collapse

Sahana Kiran
Source – Bitcoinist

There have been a series of unfortunate events that occurred throughout the week in the crypto town. The downfall of the FTX empire continued to send shock waves across the globe. While users’ funds were still stuck on the platform, several employees claimed to have lost their life savings. Amidst this, another prominent platform, BlockFi abruptly paused withdrawals.

Earlier today, the New Jersey-based exchange alerted the community that it would be “limiting platform activity.” In a recent letter that was posted on Twitter, BlockFi noted it was “shocked and dismayed” by the collapse of FTX and Alameda.

As seen in the above tweet, BlockFi would be pausing client withdrawals. In addition to this, the crypto lender urged the community to refrain from depositing into BlockFi wallet or interest accounts during this period.

BlockFi and FTX

It should be noted that back in July this year, FTX acquired BlockFi while the crypto lender was in deep financial trouble. The platform suffered from an $80 million exposure to the collapse of Three Arrows Capital. The firm initially affirmed to be “fully functional” despite the downfall of FTX.

Earlier this week, the crypto lender noted that it had a $400 million line of credit from FTX.US and not FTX. Therefore, it would remain an independent entity up until July 2023.

Sam Bankman-Fried, the CEO of the troubled firm recently noted that FTX.US was operating fine and assured that user funds were safe.

However, earlier today, things took a whole different turn. The firm noted how it wouldn’t be able to function properly considering the lack of clarity in this ordeal. It remains unsure when the exchange would start functioning properly again.

While FTX appeared as a saving grace for BlockFi, the community noted how the downfall of the exchange would bring down all the platforms it acquired.