FTX US signs deal with BlockFi with possibility to buy platform
- July 2, 2022
- 0
BlockFi CEO Zach Prince said the US division of the FTX bitcoin exchange will give BlockFi a $400 million revolving loan and get an option to buy the
BlockFi CEO Zach Prince said the US division of the FTX bitcoin exchange will give BlockFi a $400 million revolving loan and get an option to buy the landing platform for $240 million.
Yesterday, we signed definitive agreements with FTX US, subject to shareholder approval, to:
1. A $400 million revolving credit facility subject to all client funds; and
2. Option to acquire BlockFi for up to $240 million depending on performance triggers.— Zac Prince (@BlockFiZac) Jul 1, 2022
According to him, given additional factors, the deal represents a total valuation of BlockFi of up to $680 million. The deal is awaiting approval by shareholders.
Prince said that fear and uncertainty in the cryptocurrency market led to a settlement with FTX US due to falling prices, problems with Celsius crypto lending service and the default of Three Arrows Capital (3AC) hedge fund.
The BlockFi head said the platform lost nearly $80 million despite a quick liquidation and hedging response. Prince has promised to cover losses without affecting client funds.
In the same week, 3AC news further increased the fear in the market. While we were one of the first to fully accelerate our overcollateralized loan to 3AC and liquidate and hedge all collateral, we faced losses of ~$80 million, a fraction of the losses reported by others.
— Zac Prince (@BlockFiZac) Jul 1, 2022
Prince said the deal will not affect BlockFi’s products and customers. In the future, it hopes to improve services by collaborating with FTX US.
“All of our products and services, including deposits and withdrawals, trading platform, credit card and global enterprise services, continue to operate as usual with additional funding,” said BlockFi CEO.
The FTX USA platform and products are largely complementary to BlockFi and we expect improvements to our services through increased collaboration. Expect more exciting news about it soon.
— Zac Prince (@BlockFiZac) Jul 1, 2022
On June 21, BlockFi agreed to a $250 million revolving line of credit with FTX.
On June 24, the WSJ wrote about the exchange’s plans to buy shares on the platform. According to CNBC, it was about $25 million.
In March 2021, BlockFi’s valuation reached $3 billion. In June 2022, investors dropped the platform’s value from $5 billion to $1 billion, according to The Block.
According to the media, the desire to enter the capital of BlockFi was also expressed by Morgan Creek Digital and the Ledn crypto lending platform.
Recall that in May, FTX chairman Sam Bankman-Fried promised to spend “billions” on buying shares in other companies.
In June, he talked about Alameda Research’s efforts to reduce negative events in the cryptocurrency market.
Read ForkLog bitcoin news in our Telegram – cryptocurrency news, courses and analysis.
Source: Fork Log
I’m Sandra Torres, a passionate journalist and content creator. My specialty lies in covering the latest gadgets, trends and tech news for Div Bracket. With over 5 years of experience as a professional writer, I have built up an impressive portfolio of published works that showcase my expertise in this field.
