Cryptocurrency lender BlockFi is preparing a potential bankruptcy filing after halting withdrawals of customer deposits and acknowledging it has “significant exposure” to bankrupt exchange FTX, according to The Wall Street Journal.

Following FTX's fall from grace, as a result of an imbalanced sheet of sister trading firm Alameda Research, and all of its affiliates now in bankruptcy proceedings, BlockFi had paused customer withdrawals and has also asked customers not to submit any deposits in a move it called the "most prudent" as it reels from the collapse of the crypto trading giant.

The lender denied rumours that a majority of its assets were held at FTX, but did acknowledge on Monday that in addition to having deposits on the platform, it had an undrawn line of credit from FTX and obligations that FTX owed it.

“We do have significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at, and undrawn amounts from our credit line with FTX.US,” BlockFi said in a Reuters report this week.

FTX had filed for bankruptcy last week and at the time estimated it had more than 100,000 creditors. Now, the company has dramatically upped that estimate to over 1 million creditors.