California Finance Regulator Revokes BlockFi's Lending License
FTX, which filed for bankruptcy Friday, had given BlockFi a $400 million line of credit.
California's Department of Financial Protection and Innovation said Friday it was moving to suspend BlockFi's lending license as the regulator investigates the crypto lender.
According to a DFPI press release, the move comes in response to BlockFi halting withdrawals. The lender did this on Thursday night, citing a lack of clarity around FTX. The exchange's FTX US unit had extended a $400 million line of credit to BlockFi earlier this year.
The suspension will last for at least 30 days, DFPI said.
"BlockFi’s announcement, made on November 10, 2022, from its Twitter account @BlockFi, acknowledged that it cannot 'operate business as usual' given the 'lack of clarity on the status of FTX.com, FTX US and Alameda.' The DFPI is investigating BlockFi’s compliance with the laws within the Commissioner’s jurisdiction, including the California Financing Law. The DFPI is also investigating FTX," DFPI said.
FTX, alongside FTX US and Alameda, filed for bankruptcy on Friday morning, after days of speculation that it might be insolvent. FTX CEO Sam Bankman-Fried, who also resigned on Friday, had previously said that FTX had "liquidity" issues but that assets were "fine" prior to filing for bankruptcy.
FTX filed for Chapter 11 bankruptcy protection, indicating the company hopes to restructure and return once it has gone through the bankruptcy process.
"BlockFi reports to the DFPI that it has ceased offering loans in California and asks clients not deposit to the BlockFi Wallet or its interest accounts," DFPI's release said.
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