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FTX gives BlockFi $400M credit facility; has option to buy company for up to $240 million FTX gives BlockFi $400M credit facility; has option to buy company for up to $240 million

FTX gives BlockFi $400M credit facility; has option to buy company for up to $240 million

BlockFi has confirmed it has given FTX the option to purchase the business for up to $240 million

FTX gives BlockFi $400M credit facility; has option to buy company for up to $240 million

Cover art/illustration via CryptoSlate

BlockFi’s CEO Zac Prince on July 1 announced a $400 million credit facility from FTX and the option to purchase the company in its entirety for up to $240 million depending on performance.

The statement comes less than 24 hours after CNBC reported that BlockFi was being acquired by FTX for just $25 million. Prince denied the claims immediately but held off releasing further information until Friday afternoon.

The President of FTX, Brett Harrison, stated that he was “excited” to help BlockFi through a “strategic partnership.”

BlockFi claims FUD causes liquidity issues

Prince confirmed that BlockFi has not yet required the use of the loan and that all BlockFi services “continue to operate normally.”

In a multi-part Twitter thread, Prince detailed the events that led to the deal, including confirming that recent market volatility had “a negative impact on BlockFi.”

Prince asserted that BlockFi had “no exposure” to Celsius, yet the subsequent influx of client withdrawals led to liquidity issues with the company.

However, Prince confirmed that BlockFi lost $80 million when it liquidated a loan issued to 3AC.

The BlockFi CEO said the loss did not affect client funds and was its only exposure to the firm. BlockFi’s “risk framework combines counterparty credit analysis, collateral haircuts, and portfolio limits based on stress testing, and we have zero client funds in DeFi protocols,” he added.

The decision to secure a deal with FTX was made in order to “add capital to our balance sheet to bolster liquidity and protect client funds.”

Following securing additional investment, Prince stated that “there is now even more upside in the future” for BlockFi clients due to FTX’s “complimentary” products. He then commented on the increase in FUD in the crypto markets and attempted to quell fears stating that crypto is “an ecosystem on the rise.”

A bullish future for BlockFi?

Prince also announced that interest rates on BlockFi would be increased, allowing investors to earn more interest on their deposits.

The general community consensus on the announcement has been broadly positive, with people such as Rahu Sood of Irreverent Labs saying, “much respect for how you handled this situation.”

The entire Twitter thread can be found below.

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