- BlockFi said it has “significant exposure” to FTX. This takes the form of obligations owed to it by Alameda, assets held on the exchange, and also an unknown amount of undrawn funds from its $400 million line of credit from FTX US.
- The crypto lender denied the rumors that it has the majority of its assets on the defunct exchange.
- BlockFi expects that the FTX bankruptcy procedures will delay the recovery of the obligations.
- Withdrawals and other activity on BlockFi remain halted.
Crypto lender BlockFi acknowledged having a “significant exposure” to the defunct exchange FTX in a blog post on Monday. The firm also said that the rumors that it holds the majority of its assets on FTX are “false.”
BlockFi said its exposure to FTX consists of obligations owed to it by Alameda, assets held at FTX.com, and undrawn amounts from its $400 million line of credit from FTX US.
“While we will continue to work on recovering all obligations owed to BlockFi, we expect that the recovery of the obligations owed to us by FTX will be delayed as FTX works through the bankruptcy process,” the company said in a blog post.
BlockFi reassured its users and investors that it’s “working around the clock to evaluate all of our available options” and that it has “the necessary liquidity” to explore any option. Additionally, it said it has “engaged expert outside advisors that are helping us navigate BlockFi’s next steps” and reiterated that its clients remain its top priority.
BlockFi halted all activity, including withdrawals, on Friday, citing uncertainty around FTX and its associate companies. The firm asks clients not to deposit any funds to BlockFi Wallet or Interest Accounts.
The crypto lender also has a deal with FTX to be acquired if certain criteria are met. Flori Marquez, Founder and Chief Operating Officer at BlockFi, said last week that the company “will remain an independent entity until at least July 2023.” This statement alluded to the deal between the two firms.
However, the deal is likely to fall through now that the exchange has filed for bankruptcy. This comes after revelations that it has a $10 billion hole in its balance sheet. According to reports, FTX moved billions of dollars in customer funds to its sister crypto trading firm Alameda Research to engage in risky bets.
On the Flipside
- It’s unclear when – if ever – BlockFi will resume activity on its platform.
- The exact amount of BlockFi’s exposure to FTX is unknown.
Why You Should Care
BlockFi is one of the largest crypto lenders left in the crypto industry. If it goes under, it’s possible that its users and investors will be unable recover their funds. They may also have to wait for years to obtain refunds.
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