A new email to customers from crypto lending platform BlockFi has revealed that withdrawals from the company remain paused due to strong ties with the now-defunct cryptocurrency exchange FTX.
In an email sent out a few hours ago, BlockFi assured customers that they never stored customer assets on the FTX platform.
“The rumours that a majority of BlockFi assets are custodied at FTX are false,” wrote BlockFi. While no assets were stored on FTX, BlockFi added that it had “significant exposure” to FTX and “corporate entities” associated with FTX’s sister hedge fund Alameda Research.
As a result, BlockFi has paused withdrawals indefinitely while asking that customers do not submit any deposits to their accounts.
Ultimately, this means that BlockFi users still can’t access their funds on the platform. The news comes as tensions over the safety of crypto funds are at an all time high, with many major crypto exchanges and lending platforms having a harsh spotlight shone upon them.
BlockFi’s $400M loan from FTX
Concerningly for BlockFi customers, the email additionally clarified that BlockFi still has “undrawn amounts” from its credit line with FTX US.
Earlier this year, BlockFi became linked to FTX after taking out a US$400 million line of credit from the American arm of the exchange, FTX US. The credit also came with terms and conditions for a potential acquisition by FTX.
The credit BlockFi received from FTX helped keep BlockFi above water, helping it to avoid full-blown failure related to the Terra (LUNA) collapse.
Still, BlockFi has assured customers that they have all of the necessary financial ammunition to keep operations going moving forward.
“BlockFi has the necessary liquidity to explore all options and we have engaged expert outside advisors that are helping us navigate BlockFi’s next steps,” reads the email.
In a tweet from June this year, BlockFi claimed to have a strong balance sheet at the time, calling itself well-positioned for long-term stability.
BlockFi first paused withdrawals on November 11, after revealing substantial exposure to FTX.
Historically, BlockFi offered extremely high yields on “safe” crypto deposits to its customers. BlockFi currently offers 7.5% yield, but at its peak customers were offered up to 9.3% annual yield (APY) on a range of crypto assets.