By Mark Ackman
One of the world’s leading and fastest-growing crypto trading platforms, Blockfi, has suspended withdrawals.
The suspension of withdrawal was informed to the customers through a letter in which the platform explained that it is unsure of FTX’s present and future status.
Blockfi Resorts to Suspending Customer Withdrawals
On 10th November 2022, a quite shocking announcement was made by the world’s leading and rapidly growing crypto trading platform, Blockfi.
The firm announced that due to ongoing reasons, particularly relating to FTX, it has been forced to suspend withdrawals immediately.
One of the reasons explained by Blockfi for suspending withdrawals was the financial difficulty being faced by FTX currently.
The financial difficulty was termed by Blockfi as a ‘lack of clarity’ as a result of which the present and future status of FTX is unclear. It was on the basis of this non-clarity that the withdrawals had been suspended.
Ambiguous Status of FTX
Blockfi revealed that it was shocked to learn about recent developments that took place in FTX, which it came to know through Twitter.
It said further that considering these developments, it would be impossible for Blockfi not to take immediate measures and is forced to suspend withdrawal till further intimation.
At the end of the announcement, Blockfi suggested that it shall keep its customers updated regarding the developments taking place.
In the meantime, Flori Marques, co-founder of Blockfi, stated that the suspension would not curtail access to products of Blockfi. He said that all of the firm’s products are accessible and operational.
He further stated in a tweet message that his company had secured a loan of US$ 400 Million from FTX US and not FTX.com. He pointed out that both these entities are entirely different entities.
Marquez explained that his company operates independently.
Background of FTX’s Deal
Earlier in June this year, Blockfi had secured a credit line of US$ 250 Million from FTX. The credit facility was obtained for the purpose of bolstering Blockfi’s balance sheet.
Against the loan, Blockfi entered into an agreement with FTX. Under the agreement, Blockfi agreed that FTX shall have the option of acquiring Blockfi in case the loan is not repaid.
It may be noted that Blockfi is also struggling with financial difficulties. Resultantly, the company had to let go 20% of its staff in June because it failed to counter the impacts stemming from the crypto winter season.
Furthermore, Blockfi made a loss of US$ 80 Million soon which the company had invested in Three Arrows Capital and the downfall dawned upon Three Arrows Capital.
Considering that Blockfi’s balance sheets are in the negative and the crypto winter season hasn’t ended yet, hence, further difficulties are expected for Blockfi.
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