Crypto exchange FTX has recently signed a deal with cryptocurrency platform BlockFi which includes an option to buy the lender—recently valued at $4.8 billion, according to private market data platform PitchBook— “at a variable price of up to $240 million based on performance triggers.” The company did not give a minimum deal price.
BlockFi CEO Zac Prince said in a Twitter thread that the deal was reached as part of an effort “to bolster liquidity and protect client funds.”
FTX increased a previous $250 million revolving credit facility to a total of $400 million. According to Prince, agreements are still subject to shareholder approval. A revolving credit facility is a line of credit that is arranged generally between a bank (in this case, however, will be FTX) and a business (BlockFi).
As to why Prince and the firm agreed to move forward with the deal, the CEO pointed out the crypto market volatility and the failure of hedge fund Three Arrows Capital. (Read more: What is Three Arrows Capital? Investment Firm Confirms Loss from Luna and Terra Collapse)
Further, Prince also stressed what crypto company Celsius did. The company froze customer deposits two weeks ago citing “extreme market conditions.” According to him, Blockfi also suffered an uptick in client withdrawals that week, despite having no exposure to Celsius.
BlockFi also noted that it has suffered $80 million in losses “which is a small fraction of losses publicly reported by other lenders.”
“Our 3AC losses will be part of 3AC’s ongoing bankruptcy case(s) so more info will surely come out as those cases proceed,” Prince stated.
Following these recent crypto crashes and the ongoing bear market, BlockFi is also among the crypto companies that decided to let go of employees. It laid off 20% of its 850 employees — around 170 to 200 people.
This article is published on BitPinas: Crypto Exchange FTX Agrees to Buy Crypto Lender BlockFi at a Deep Discount
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