BlockFi has placed client funds on hold, according to a user email reviewed by The Block.
“Currently, customers are unable to deposit new funds with BlockFi,” the email read. "As a result, we have placed your loan on administrative hold. Any payments due, including interest and payments due, will be put on hold until further notice."
BlockFi said it had “significant exposure” to troubled cryptocurrency exchange FTX and announced a withdrawal suspension on Nov. 10. FTX filed for Chapter 11 bankruptcy protection the next day. Earlier in the week of Nov. 8, founder Flori Marquez tweeted that all of BlockFi’s products are “fully operational.”
Interest rates on BlockFi loans will be set to 0% starting Nov. 11, the client email said, adding that “margin calls and automatic liquidations at pre-defined loan-to-value levels are currently paused”
Customers will not have to make repayments on loans that are already due and will not report loan delinquencies to credit bureaus, the email said. According to sources, loan holders will not pay late fees on any payments. Borrowers do not appear to be asking for forbearance on their loans.
BlockFi warned that its loan servicing provider, Scratch, would show the loan as delinquent in its system. “But considering the 0% interest rate, your loan will not accrue any interest or late fees,” BlockFi’s email said.
