BlockFi halts withdrawal following FTX collapse + 4 other crypto stories this week

Temitope Akintade
BlockFi


The crypto market witnessed crises sparked by the collapse of the FTX exchange this week. The aftermath of the unfortunate incident continues to spread like wildfire across the industry. A few hours ago, crypto lender BlockFi said they are now limiting client activity and pausing withdrawals on the platform due to the FTX contagion.

Related post: Crypto market in turmoil as Binance back out from FTX deal 

Recall that several crypto lenders have already bitten the dust this year. Celsius, Voyager 3ac and many others became insolvent and filed for bankruptcy earlier in the year, and now it’s BlockFi’s turn.

Can 2022 be over for the crypto industry, please? 

Here are a few major stories from the crypto space this week.

El Salvador bitcoin is not on FTX

After it was suggested that the President of El Salvador Nayib Bukele was holding some of the nation’s Bitcoin on the FTX exchange, the CEO of Binance, Changpeng Zhao (CZ), came out to update the crypto space on the alleged rumours.

Salvadoran President Nayib Bukele delivers his annual address to the nation marking his second year in office at the Legislative Assembly in San Salvador on June 1, 2021. (Photo by MARVIN RECINOS / AFP) (Photo by MARVIN RECINOS/AFP via Getty Images)

CZ took to Twitter yesterday to clarify the misinformation after Billionaire Mike Novogratz suggested that El Salvador owned Bitcoin on FTX during an interview with CNBC’s Squawk Box. CZ exposed the misinformation and disclosed the messages with the El SalvadorPresident.

Man, the amount of misinformation is insane. I exchanged messages with President Nayib a few moments ago. He said, “we don’t have any Bitcoin in FTX, and we never had any business with them. Thank God!”

Kucoin is not insolvent 

As the sell-off sparked by the FTX liquidity crisis continues, the CEO of KuCoin has decided to publicly address the allegations that his trading platform was struggling with insolvency.

KuCoin’s CEO Johnny Lyu criticized the recent ‘FUD’ around his crypto exchange which, as he said, was “probably the tenth time in the past 6 months some rumour on Twitter circulates that KuCoin is ‘insolvent,’” in a blog post on Wednesday. 

Notably, after crypto analytics platform Nansen published its exchange stablecoin outflow chart, which, according to Lyu, mistakenly showed an ERC20 to TRC20 translation as $300 million draining from his platform, rumours started circulating about KuCoin being in trouble.

As he explained, the information was a simple misinterpretation which has been cleared in the meantime. Lyu posted Tronscan and Etherscan explorer screenshots and links to transaction details that support his argument. Finally, Lyu promised users that “just like in the past, we would never misappropriate user funds and we will ensure full transparency,” adding that:

“KuCoin will always guarantee 1:1 withdrawal. (…) To those who are still concerned, we will release our Merkle tree proof-of-reserves or POF in one month.”

BlockFi halts withdrawal 

Crypto lending firm BlockFi is the latest to limit customer activity on its platform. Fearing a major liquidation event, the company has halted withdrawals.

In the early hours of Friday, BlockFi announced that it was “unable” to operate business as usual.” BlockFi cited a lack of clarity regarding FTX, FTX.US, and Alameda as the reason for this decision. It said until there is clarity, it will limit activity, including pausing withdrawals. BlockFi also requested that clients not make deposits, which would be highly unlikely given the current situation.

BlockFi

BlockFi claimed that its priority was to protect its clients and their interests. But that will not help those that now have assets locked and inaccessible on BlockFi.

Another DeFi Protocol hacked 

Stablecoin-focused DeFi protocol DFX Finance was attacked earlier today, with the attacker stealing roughly $4 million. The team has paused all smart contracts. PeckShield tweeted about the incident, stating that the protocol’s DEX pool was exploited. The losses are estimated to be 3,000 ETH, worth about $4 million.

DFX Finance acknowledged the incident, highlighting that it was notified about the suspicious activity 20-30 minutes after the first transaction. The team paused all DFX contracts a few minutes after confirming the attack.

The attacker is already funnelling the stolen funds into Tornado Cash to prevent tracking. The DFX team noted that Polygon contracts are susceptible to the same attack vector and, as such, will be initiating an emergency shutdown of those pools. The platform will release a postmortem of the attack soon.

Related post:

2022 set to break hacking records as DeFI protocols lose $760m in October

DeFi hacks continue to pile up as we head into the final month of 2022. This year, the attacks have crossed over $3 billion. 

Big NFT investor offloading assets 

A big NFT investor is offloading his collection at a discount. On Friday, NFT collector Deepak Thapliyal announced that he plans to sell his collection. He will sell the lot to the highest bidder, he added. The asking price is 8,000 ETH or roughly $10 million at the current Ethereum price. 

NFTs, Blockchain and Web3: The next kinds of nerds are being raised

Deepak’s collection includes Alien Tiffany Punk 5822 and nine other Tiffany Punks. Additionally, there is the Gold Ape 232, six more from the Bored Ape Yacht Club collection, and three Mutant Apes. There are also four Otherside virtual land plots and the ENS name helix.eth.

With crypto and NFT markets currently in bear territory, finding a buyer may not be simple. 

That is all from us this week, see you same time next week!


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