FTX US has signed a deal with BlockFi that will give crypto derivatives the option to purchase the lending company.
In a Friday thread on Twitter, BlockFi CEO Zac Prince said the crypto lender has signed agreements with FTX US for a $400 million revolving credit facility as well as an option to acquire BlockFi “at a variable rate of up to $240 million based on Performance. Motivations.” According to the CEO, the deal was reached as part of an effort to “enhance liquidity and protect client funds” at BlockFi.
Agreements are still subject to shareholder approval. Prince said that volatility in the cryptocurrency market, “particularly market events related to Celsius and 3AC,” which had a negative impact on BlockFi, led to this decision. The crypto-lending platform suffered nearly $80 million in losses in the week after halting its centenary withdrawals and, after considering “many unattractive options” for recovery, has partnered with FTX US.
“All of our products and services — including funding and withdrawals, our trading platform, credit cards and global corporate services — continue to operate normally, with additional capital strength behind them,” Prince said.
In a blog post on Friday, BlockFi criticized reports from Thursday claiming that FTX intends to buy the company for $25 million. According to the CEO, the $400 million credit facility, $240 million acquisition price and “other potential considerations” totaled $680 million — for a company that had a $5 billion valuation in June 2021. Prince hinted that the report was due to a “call improperly leaked” and “purely personal conjecture by one party”.
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BlockFi was one of the first to liquidate some of Three Arrows Capital’s sites in June after the company was said to have failed to meet margin requests from lenders. Amidst the market downturn and extreme price volatility, the crypto lender announced that it would lay off 20% of its 850 employees, while retaining around 600 people. It is not clear whether the acquisition of FTX US will change this decision.