BlockFi halts withdrawals amid market meltdown

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BlockFi halts withdrawals amid market meltdown

BlockFi, a New Jersey-based exchange, has informed clients that it will have “limited platform activity,” and will be pausing withdrawals amid the ongoing FTX issue. Apart from BlockFi’s announcement, California state officials have also announced an investigation as a result of the failure of the firm.

BlockFi uploaded a message on the social networking platform late on Thursday stating that they, like the rest of the globe, learned about the scenario through Twitter. The news about FTX and Alameda startled and appalled BlockFi, according to the statement.

BlockFi: Uncertainty around the saga forced the action

BlockFi, saved by FTX back in June, claims that they could not continue business as usual due to the uncertainty surrounding the fate of FTX, FTX US, and Alameda. Platform activity will thus be restricted, including withdrawals. Additionally, the business prohibited users from funding interest-bearing accounts and hosted wallets.

While BlockFi pledged to keep in touch as often as possible, it admitted that this would be less frequent than what its clients and stakeholders are accustomed to.

After laying off 20% of its workforce the previous month, BlockFi offered buyouts to its employees to reduce headcount in July. These buyouts happened a few weeks after FTX, and BlockFi agreed to terms for a $400 million loan and prospective purchase in June.

At the time, BlockFi asserted that it had a solid balance sheet and was well-positioned for long-term stability. BlockFi tweeted that the arrangement with FTX for a credit facility gave them access to money that further bolstered their balance sheet and platform robustness.

The SEC, Texas, New Jersey, and California’s financial protection agency were the previous organisations to launch inquiries into FTX before BlockFi disclosed their recent development on the issue.

According to the Department of Financial Protection and Innovation, “we advise customers to be aware of the dangers of investing in volatile crypto assets. Consumers and investors should be informed that cryptocurrency assets are high-risk investments and shouldn’t anticipate getting their money back in case they lose money.”

The organisation issued a warning to investors, claiming that several cryptocurrency asset providers, including FTX, may need to fully explain the risks that users assume when they deposit assets into these platforms. It further noted that crypto asset providers were not controlled by the same laws and regulations as banks and credit unions, which were obliged to have deposit insurance.

They stated, “We require anybody providing  loans, securities, or other financial services in California to abide with our financial laws.”

FTX resumes withdrawals

On Nov. 10, information from Etherscan showed that the embattled cryptocurrency exchange FTX had started withdrawals. According to the reports, as of 3:50 pm UTC, the exchange’s hot wallet address had resumed activity after being offline since FTX declared on November 8 that it would stop all user withdrawals.

Even though there hasn’t been a formal statement, several unverified claims from Twitter users and further blockchain data demonstrate that money is leaving the exchange. Others, though, have griped that they are still waiting for withdrawal requests submitted days ago to be handled. The FTX hot wallet is now losing money at a pace of 2 to 3 transactions per minute.

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Brenda Mary

Brenda Mary is a crypto enthusiast and a graduate of The University of Nairobi in economics. Brenda’s passion brings her back to her elementary school years as a poet. She enjoys discussing blockchain technology and is committed to producing original content. Brenda also covers other rapidly developing markets and economic and cryptocurrency studies.