BlockFi announced on Twitter that this will halt customer payouts due to “a shortage of information” regarding the situation of FTX US, a former sponsor, along with the ambiguity surrounding FTX.com and sibling financial firm Alameda Research.
Moves by BlockFi
At the time, BlockFi users were urged not to add money to their involvement or BlockFi accounts by the Jersey County, NJ business. BlockFi told reporters that the network’s aggregate operational customer holdings totaled $3.9 billion in its Q2 release.
The changes at BlockFi highlight rising worries regarding a chain reaction following the collapse of cryptocurrency platform FTX and investment firm Alameda Research. The collapse in cryptocurrency transactions over 2022 has reportedly shaken financiers of virtual assets like BlockFi and Celsius Networks, which itself is insolvent.
An individual acquainted with the situation claimed that BlockFi had begun the procedure of transferring its holdings to FTX for safekeeping. The insider continued, wanting to remain anonymous owing to the sensitivity of the situation, that the bulk of BlockFi’s resources was not yet shifted.
According to a source, the cryptocurrency financier gave Alameda Research mortgages before giving an exact figure. The changes at BlockFi highlight rising worries regarding a chain reaction following the collapse of cryptocurrency platform FTX and investment firm Alameda Research. The collapse in cryptocurrency transactions over 2022 has reportedly shaken financiers of virtual assets like BlockFi and Celsius Networks, which itself is insolvent.
An individual acquainted with the situation claimed that BlockFi had begun the procedure of transferring its holdings to FTX for safekeeping. The insider continued, wanting to remain anonymous owing to the sensitivity of the situation, that the bulk of BlockFi’s resources was not yet shifted. According to a source, the cryptocurrency financier gave Alameda Research mortgages before giving an exact figure.
BlockFi is therefore no longer confident about whom and how the financial support for its money borrowed with FTX as well as the counterparty risk for the Alameda debts happened to come from, the individual told reporters, expressing apprehension that the financing may have started with financial investments. The borrowings are excessively securitized with cash reserves, which include the equity securities of Robinhood Inc.
The Fate of FTX.com
The CFTC and the US SEC are investigating if FTX.com improperly mismanaged client cash. The US SEC has also been looking into Bankman-Fried for possible corporate law breaches. A $400 million working capital arrangement was provided to BlockFi originally this year by FTX US as part of a deal which thus included the chance to acquire the firm.
BlockFi, which had a March 2021 estimate of $3 billion, solicited funding in June at a capitalization of roughly $1 billion. Regulatory officials also scrutinized the company’s earnings portfolio, and then it was fined $100 million by the Commission. BlockFi was affected by the nonperforming loans of cryptocurrency liquidity firm Three Arrows Capital, which also collapsed following the TerraUSD tokenized blowout in May, for an amount of $80 million.
The holdings of FTX.com’s domestic operating business and “associated organizations” were frozen by regulators in the Bahamas, under which FTX.com is headquartered, adding to the evidence that Bankman-empire Fried’s is in trouble.
