FTX on the verge of purchasing BlockFi in $25M fire sale: Report

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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.

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