Following the collapse of FTX, cryptocurrency lender BlockFi announced that it would limit its activities and would be unable to conduct business as usual. BlockFi, a cryptocurrency lender, announced on November 11 that it would suspend customer withdrawals due to the “lack of clarity” surrounding FTX’s current situation in a tweet.

BlockFi stated that it is restricting platform operations and suspending customer withdrawals. Moreover, the company has asked clients not to deposit money at this time.

BlockFi’s post about halting withdrawals came just two days after founder and CEO Flori Marquez tweeted that “all BlockFi products are fully functional,” claiming that the company will be self-sufficient until at least July of next year.

The changes at BlockFi highlighted growing concerns about a chain reaction following the failures of cryptocurrency exchange FTX and trading firm Alameda Research.

BlockFi was transferring its assets to FTX for custody. The insider went on, preferring to remain anonymous due to the sensitivity of the situation. He stated that BlockFi has not yet relocated the majority of its assets. The cryptocurrency lender provided Alameda Research with loans without disclosing the exact amount. He claimed that the loans are excessively collateralized with marketable assets such as Robinhood shares.

BlockFi is no longer certain where the funds for its credit line with FTX US and the collateral for the Alameda loans came from, raising concerns that it may have started with customer funds.

BlockFi and FTX US Deal

In July, BlockFi reached an agreement with FTX.US worth $680 million, which included a $400 million credit line and a $280 million option for FTX to acquire the company. BlockFi and FTX US announced an agreement in which FTX US will provide BlockFi with a $400 million credit facility and grant the cryptocurrency exchange the right to purchase BlockFi.

The purchase price would be influenced by a number of factors. These conditions included BlockFi obtaining approval from the United States Securities and Exchange Commission (SEC) to operate a yield-generating business there.

Having at least $10 billion in customer assets and BlockFi’s annual revenue by the time FTX US exercised its option. If these conditions were met, FTX US would have to pay up to $240 million to acquire the lender. If the conditions were not met, BlockFi could have been sold for as little as $15 million.

Marquez seemed to be addressing this arrangement in a tweet thread dated November 8 when she stated that BlockFi was an “independent business entity” and that the lender’s deal was with FTX US, not FTX international. The acquisition appears to have been called into question after FTX, the international arm of FTX US, discovered a $10 billion gap in its records.

Crypto Prices Recovery

The optimism stemmed from an October inflation reading that was higher than expected but lower than analyst expectations. In particular, annual CPI growth fell from 8.2% in September to 7.7% in October. The market is beginning to stabilize as a result of the Fed’s recent quick rate increases, which is encouraging.

Following the publication of the figures, the prices of Bitcoin and Ether increased by 7% and 10%, respectively. It suggests that, despite the FTX controversy, cryptos are on the mend.

However, the crisis triggered by the collapse of the FTX crypto empire swallowed BlockFi, a problematic $3 billion digital-asset lender that has suspended operations on its platform. As a result, BlockFi may struggle to survive.

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