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BlockFi says it can no longer operate its business as usual, pausing client withdrawals in the wake of FTX collapse

November 11, 2022, 10:46 AM UTC
Flori Marquez, co-founder and senior vice president of operations for BlockFi
Jordan Vonderhaar/Bloomberg via Getty Images

Crypto lender BlockFi said it could not conduct business as normal and would be limiting activity in the wake of FTX’s collapse.

The company said in a tweet that the “lack of clarity” around FTX’s current situation meant it would pause client withdrawals. It also told clients not to deposit to its wallet or interest accounts.

“We will share more specifics as soon as possible,” the company said. “… we intend to communicate as frequently as possible but anticipate that this will be less frequent than what our clients and other shareholders are used to.”

BlockFi’s tweet Thursday came just two days after founder and chief operating officer Flori Marquez tweeted that “all BlockFi products are fully operational,” saying it was an independent entity until at least July of next year.

BlockFi and FTX US announced this past July that the companies had agreed to a deal wherein FTX US would provide BlockFi a $400 million credit facility, which would also allow the crypto exchange the right to acquire BlockFi. The price of the acquisition would depend on certain terms.

These terms included BlockFi receiving clearance from the U.S. Securities and Exchange Commission (SEC) to operate a yield-generating service in the U.S.; reaching at least $10 billion in client assets by the time FTX US exercised its option and BlockFi’s annual income.

If these terms were met, FTX US would have to spend up to $240 million to acquire the lender. If the terms weren’t met, BlockFi could have been sold for as little as $15 million.

Marquez appeared to be referring to this deal in her Twitter thread from Tuesday, saying BlockFi was an “independent business entity” and noting that the lender’s deal was with FTX US, not FTX international.

This deal seems to have been thrown into doubt after the revelation that FTX, the global company linked to FTX US, had an up-to-$10 billion hole in its books.

FTX is now the subject of state and federal investigations and has halted withdrawals. While FTX US is okay, according to FTX founder Sam Bankman-Fried, the company announced Thursday that it may halt trading in the coming days and advised its users to halt deposits.

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