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With the impacts of the ongoing cryptocurrency market meltdown biting most crypto lenders very hard, outfits like BlockFi have sought out a solution from FTX Derivatives Exchange.
As announced by BlockFi’s Chief Executive Officer, Zac Prince, the company has signed a termed sheet with FTX to secure a $250 million revolving credit facility.
As detailed by Zac, the newly acquired credit facility is very essential in keeping the company’s operational efficiency intact amidst the massive downturn in the broader financial ecosystem. He posited that the loan will provide the company with access to capital that will further bolster its balance sheet and its overall platform strength.
“The proceeds of the credit facility are intended to be contractually subordinate to all client balances across all account types (BIA, BPY & loan collateral) and will be used as needed,” he said via the tweet.
Today @BlockFi signed a term sheet with @FTX_Official to secure a $250M revolving credit facility providing us with access to capital that further bolsters our balance sheet and platform strength.
— Zac Prince (@BlockFiZac) June 21, 2022
BlockFi comes off as one of the major crypto-asset service providers that felt the weight of the latest slump that saw the price of Bitcoin (BTC) crash to a multi-year low. In the wake of the past week’s crisis, BlockFi announced that it will lay off about 20% of its workforce in a bid to refocus its priorities and manage costs. Like BlockFi, top exchanges like Coinbase Global Inc (NASDAQ: COIN), and Gemini also made this move.
Despite these layoffs, Zac heaped accoladed on the company’s staff for staying at the top of their games while managing clients’/investors’ funds.
“Throughout the market volatility of the last several weeks, I’m incredibly proud of how our team, platform, and risk management protocols have performed. Today’s landmark announcement reinforces BlockFi’s commitment to serving its clients and ensuring their funds are safeguarded,” he said.
Zac also affirmed that moving forward, the newly secured loan will bridge the gap between BlockFi and FTX, thus unlocking a whole lot more collaborations in the near future.
“This agreement also unlocks future collaboration and innovation between BlockFi & FTX as we work to accelerate prosperity worldwide through crypto financial services. This is a significant step forward in our commitment to the strength and accessibility of crypto markets,” the tweet reads.
BlockFi Escapes, Other Crypto Lender in Search of Solutions
That BlockFi was able to secure the $250 million loan from FTX does not mean the coast is clear for other mainstream crypto lenders in the space.
With Celsius Network still on the brink of liquidation, the crypto lending firm is actively in search of working solutions after the firm paused its withdrawals a little over a week ago. Other embattled lenders like Babel Finance have been able to find a way to extend the expected repayment period for their outstanding loans as it explores ways to get past their current woes.
Knowing that there are often reverberations in events in the ecosystem and that BlockFi has the needed funding to get past this downtime is not enough. As a result, other major players also need to stand on their feet to guarantee a healthy crypto lending market moving forward.