(Kitco News) -
Crypto lender BlockFi announced Thursday evening that they have been forced to halt withdrawals on the platform amidst the chaos of the FTX collapse.
"We are shocked and dismayed by the news regarding FTX and Alameda," they wrote in a Twitter post. "Given the lack of clarity on the status of FTX.com, FTX US and Alameda, we are not able to operate business as usual."
BlockFi appeared to throw shade at FTX, saying, "We, like the rest of the world, found out about this situation through Twitter." This is surprising considering FTX had recently played the role of their savior, extending the embattled lender a $400 million credit facility in July to help stave off the bankruptcy faced by rivals Celsius and Voyager.
In the end, this rescue may have further weakened FTX, plunging both firms into crisis just months later. The terms of the relationship between the two firms is likely to be picked apart by investigators, as there are claims that virtually all of BlockFi's client deposits were custodied on FTX.
BlockFi now appears poised to follow FTX into insolvency, as reports emerged later Thursday evening that they have retained bankruptcy counsel.
"Our priority has been and will continue to be to protect our clients and their interests," BlockFi wrote. "We intend to communicate as frequently as possible going forward but anticipate that this will be less frequent than what our clients and other stakeholders are used to."
The company also asked clients not to make deposits to BlockFi Wallet or Interest Accounts until further notice.
The speed of developments at BlockFi were shocking to market participants, as only 12 hours before halting activity on the platform, they had been assuring their clients that "BlockFi will remain fully operational on 11/11 and all crypto transactions, including withdrawals, will continue as normal."
Some customers were suspicious, however, as the platform announced that wire withdrawals, ACH deposits and loan processing would all be delayed until Monday, Nov. 14, ostensibly due to the Veteran's Day holiday affecting Silvergate, their US-based processor.
It looks like BlockFi and their partners will be busy today after all.
