BlockFi has not restored withdrawals due to FTX’s significant liabilities to the platform

The recovery of obligations from the exchange will be delayed because the latter is undergoing bankruptcy proceedings

15.11.2022 - 09:00

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What’s new? On November 14, representatives of lending platform BlockFi denied rumors that most of its assets are held at the bankrupt crypto exchange FTX. That said, FTX and related entities have significant liabilities to BlockFi. They include obligations from trading company Alameda Research, assets held at FTX, and unused amounts on a line of credit at the exchange’s US arm, FTX US. Representatives of BlockFi added that withdrawals are still suspended, and customers have also been asked not to make deposits to the platform’s wallet or interest accounts.

BlockFi Blog

What else does the blog say? Work to recover all liabilities to BlockFi will continue. However, the recovery of obligations to the platform by FTX will be delayed, as the latter is undergoing bankruptcy proceedings.

It is noted that BlockFi has the necessary liquidity to explore all options to resume work. Haynes and Boone, a law firm, is the primary counsel to the platform, with Berkeley Research Group (BRG), a consulting firm, acting as the financial advisor.

How are BlockFi and FTX related? In July, the lending platform faced a massive deposit outflow after a similarly-functioning platform, Celsius, froze client assets. FTX agreed to give BlockFi a loan with an option to further buy out the platform at a price to be determined by its economic performance. By August, the amount was down to $15 million from a maximum of $240 million.

As a result of FTX Group’s bankruptcy on November 11, BlockFi limited the platform’s activity. The company noted that such a measure is prescribed in the terms of the contract.

On November 13, crypto exchange AAX suspended trading and asset deposit/withdrawal due to a bug during an upgrade that led to an incorrect display of customer balances. The team had to manually check and restore the system to ensure maximum data accuracy. Operations are expected to resume within 7-10 days.

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