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BlockFi and FTX US share common client protection goals and are delighted to work together.
Crypto lending firm BlockFi has announced that it has reached an agreement with crypto derivatives exchange FTX US for a $400 million revolving credit line. The announcement was shared via the official Twitter page of BlockFi CEO Zac Prince.
Excited to share an update on our previously announced term sheet with @FTX_US – and how we've broadened the scope of the initial deal for the benefit of all key @BlockFi stakeholders.
— Zac Prince (@BlockFiZac) July 1, 2022
Agreement Includes ‘Option to Acquire’ BlockFi
Prince, who shared detailed explanations of the agreement, claims that the credit line is not the only part of the deal. In addition, there’s a clause that also says that FTX US may acquire BlockFi for as high as $240 million. However, the agreements are yet to be decided upon by the firm’s stakeholders.
According to the CEO though, the $400 million credit line, the $240 million acquisition price and some “other potential considerations” will bring the total valuation of the BlockFi to $680 million. A better situation than nothing for the crypto lender, which was still worth $5 billion a year ago.
Meanwhile, the decision to partner with FTX US does not exactly come as a surprise, to say the least. For nearly a week, there have been several reports of a potential acquisition. At some point even, rumours had it that FTX intends to purchase BlockFi for just $25 million.
But as it turns out, both BlockFi and FTX US share common client protection goals and are delighted to work together. As the CEO wrote:
“Ultimately, we found a great partner in @FTX_US, who shares our commitment to clients. This represents the best path forward for all @BlockFi stakeholders and the crypto ecosystem as a whole.”
What Led Here?
Despite a general downturn that has impacted most crypto-based firms, albeit negatively, BlockFi is having it particularly tougher than most. The firm’s woes began when Celsius halted withdrawals on its own platform. BlockFi customers went on a withdrawal spree despite that their platform had no exposure to Celsius. And soon after, Three Arrows Capital 3AC’s liquidation also saw BlockFi losing $80 million.
Owing to the market crash however, crypto lending firm recently announced its plans to lay off 20% of its staff. That is 170 out of its 850-man workforce. However, with this new deal with FTX US and a potential acquisition in the works, maybe the firm will not go ahead with the decision.