The FTX exchange's demise set off a crisis that has engulfed the whole crypto industry like a wildfire. BlockFi, a cryptocurrency lender, just announced that they are currently restricting client activity and halting platform withdrawals.
The cryptocurrency lender stated in a message that "we won't be able to do business as usual" due to the uncertainty surrounding the situation with FTX.com, FTX US, and Alameda Research. It's interesting to note that FTX US invested in BlockFi after the cryptocurrency lender had difficulties as a result of the collapse of the Terra ecosystem.
BlockFi received a crucial lifeline from FTX US in the summer of 2022 when it announced a $400 million revolving credit facility. Additionally, there was a provision for buying the business.
A growing number of people are worried about how the collapse of the cryptocurrency exchange FTX and its sister trading platform Alameda Research could affect other crypto companies.
Notice to Clients from BlockFi
The crypto lender claimed that safeguarding the interests of its clients has always been a top priority. Additionally, BlockFi has asked its users to hold off on adding money to their BlockFi wallets or other client accounts.
BlockFi has been feeling the heat of this year's market meltdown. The cryptocurrency lender has a market cap of $3 billion in March 2021. However, the business was seeking funding in June of this year at a $1 billion valuation, or one-third, of that amount.
BlockFi was hit hard by market withdrawals as other cryptocurrency lenders like Voyager Digital and Celsius Networks went under. BlockFi suffered a $80 million hit as a result of its bad debt with 3AC following the demise of the Terra ecosystem and the collapse of cryptocurrency hedge firm Three Arrows Capital.
Recent FTX collapse has compelled authorities to act. The assets of FTX.com's local trading subsidiary have been placed under a temporary freeze by authorities in the Bahamas, where the company is based.