Just a little patience and the week will be over. Unfortunately, this latest day still brings bad news to the cryptocurrency industry. BlockFi has announced that it will pause recording. As a result, customers will not be able to send cryptocurrencies from the lending platform to their own wallet for the time being.
BlockFi pauses services
Tonight at 2 p.m. Dutch time Divided Lender BlockFi has released an update on its official Twitter account to indicate that it is suspending its services for the time being. BlockFi is not a traditional bank, it does not borrow in dollars or euros, but in Bitcoin.
The company says it will limit platform activity and pause customer withdrawals. It also asked users not to deposit funds into their wallets or savings accounts, but didn’t specifically say this would disable deposits.
“We are shocked and shocked by the news from FTX and Alameda,” BlockFi wrote. “We, like the rest of the world, have been made aware of this situation via Twitter.”
FTX and Alameda guilty
In case you’ve been living under a rock this week (luckily, bitcoin is suddenly cheap), cryptocurrency exchange FTX and mutual fund Alameda Research are inextricably linked through shady financing maneuvers through their founder Sam Bankman-Fried.
In recent days, it has been observed that a significant portion of Alameda Research’s holdings are tied to FTX’s FTT token rather than traditional assets. This controversy led to a bank run on FTX. In order to obtain financing and protect itself from further losses, FTX tried to arrange a takeover with Binance, which ultimately failed.
Thom Derks, editor of BLOX, warned about a domino effect two days ago. He looked at all the parties cryptocurrency exchange FTX has invested in and specifically explained BlockFi.
American FTX has no problem
BlockFi cites these events as a reason to discontinue its services. “Given the ambiguity surrounding the status of FTX.com, FTX US and Alameda [Research]we can’t go about our business as usual.’
FTX is divided into an international office and local offices, also in the US. To some extent, they are compelled to do so by regulations in various countries. According to Sam Bankman-Fried, FTX US has no problems.
BlockFi did not specifically state whether it had financial exposure to FTX or its affiliates.
Earlier this week, BlockFi CEO and co-founder Flori Marquez said the company has received a $400 million loan from FTX US instead of FTX. It is unclear if BlockFi has any other loans on FTX.
lack of liquidity
Last summer, right after the fall of Terra Luna, Voyager and other big parties, there were rumors that BlockFi would be illiquid. One of the down parties is Three Arrows Capital and they were a major institutional client of BlockFi.
BlockFi ran out of money from Three Arrows Capital and had liquidity problems. The lender then shared a transparency report and new guidelines.
BlockFi has decided that they will keep a minimum of 10% of the total amounts owed to customers in stock for immediate return to users. A minimum of 50% of the totals must be returned within a week and a minimum of 90% of the totals must be returned within a year.
The new policy was made possible in part by a $400 million loan from FTX. According to Marquez, this credit is still intact because it is FTX US and not FTX International.
But FTX also helped BlockFi with a $250 million loan in June of this year, and it’s unknown if that will affect the US office.
BlockFi and Marquez are all saying the right things, but there is absolutely no confidence that the shooting has stopped. And as the cliché goes, where there’s smoke, there’s fire.
Source: Btc Direct
John Cameron is a journalist at The Nation View specializing in world news and current events, particularly in international politics and diplomacy. With expertise in international relations, he covers a range of topics including conflicts, politics and economic trends.
