BlockFi Will Be Acquired By FTX.US For Up To $240M

BlockFi Signs Agreement With FTX.US

BlockFi and FTX.US have reached an acquisition agreement.

(Long thread!)

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

The crypto lender’s CEO, Zac Prince, announced the news on Twitter on Friday, revealing that FTX.US would buy the company for up to $240 million based on certain “performance triggers.” Prince added that BlockFi would receive a $400 million rolling credit facility (FTX had previously offered BlockFi a $250 million credit line on June 21). The $240 million price tag marks a heavy discount from BlockFi’s previous valuation. The company   was valued at $4.8 billion after raisingit raised funds in a private round in July 2021.

Prince stated that “crypto market volatility” had a negative effect on BlockFi’s valuation. Although he cited the insolvency issues that Celsius and Three Arrows Capital faced, he underlined that BlockFi had no exposure to either company. 

Instead, he claims that the impact of Three Arrows’ abrupt demise triggered a wave of withdrawals as customers lost faith in lending services, sparking BlockFi’s own insolvency crisis. BlockFi was one of several firms that liquidated Three Arrows after failingit failed to meet a margin call when the market crashed on June 16. Prince stated that the Three Arrows saga “spread fear” in the market before revealing that BlockFi suffered $80 million in losses as a result of the fallout.

Prince went on to say that, despite the companies agreeingfact that the companies had agreed to a $680 million deal, BlockFi had not utilised any of the credit line. He then went on to explain how the firm engages in risk management practices and that it “fundamentally [believes] in protecting customer funds.” Protecting customers, according to Prince, was a key reason for adding capital to the company’s balance sheet.

Similar to BlockFi, the cryptocurrency lender Celsius encountered insolvency issues in June, but chose to halt customer withdrawals instead. The firm’s crisis is still ongoing. Other cryptocurrency lenders, such as Babel Finance and CoinFLEX, have also declared bankruptcy in recent weeks due to market turmoil.