Crypto exchange FTX is close to buying the remaining assets of digital asset lender BlockFi for $25 million, according to CNBC.
According to sources close to the matter, BlockFi stock investors have been wiped out and are now writing off their positions at a loss. In addition, it may take several months for the FTX position to close, which opens the possibility of a price shift during that period. In June 2021, BlockFi was valued at $5 billion.
BlockFi CEO Zac Prince has since denied the rumors, taking to Twitter on June 30 to refute speculation that the company is being sold for $25 million.
Earlier this year, BlockFi had over 1 million customers, over $10 billion in assets and deposits, and distributed over $700 million in crypto rewards and interest. However, BlockFi’s fortunes quickly soured after it was said to have become a major creditor of the now troubled hedge fund Three Arrow Capital, also known as 3AC. As a result, it had to liquidate 3AC’s $1.33 billion positions and is likely to incur heavy losses as the June bear market intensifies.
The situation was exacerbated by 3AC posting $400 million loan guarantees for Grayscale Bitcoin Investment Trust (GBTC) shares, which often trade at a discount or premium to Bitcoin (BTC) prices. At the time of the liquidation, GBTC shares were trading at a discount of 34% to the NAV of its bitcoin holdings, which has fallen further as BlockFi begins closing the position.
Related: FTX may be planning to buy a stake in BlockFi
Earlier this month, BlockFi said it was laying off 20% of its 850 employees due to short-term profitability issues. Just last week, FTX extended a $250 million line of credit to BlockFi and denied rumors that it was acquiring the unlucky company.
Update: Zac Prince’s latest Twitter update has been added denying the company is being sold for $25 million.