The crypto lender’s CEO Zac Prince took to Twitter Friday to announce the update, revealing that FTX.US would be buying the firm for up to $240 million based on certain “performance triggers.” Prince added that BlockFi would receive a $400 million rolling credit facility (it was previously revealed on Jun. 21. FTX.US had offered BlockFi a $250M credit line. The $240 million price tag marks a heavy discount from BlockFi’s previous valuation. After raising funds in a private round, the firm was valued at $4.8billion in July 2021.
BlockFi’s June was a difficult month, and the news of the $680million deal is a relief. Prince said that “crypto market volatility” had negatively impacted BlockFi in the lead-up to the deal. Although he mentioned the insolvency issues Celsius faced and Three Arrows Capital’s, he said that BlockFi did not have any exposure to those firms. Instead, he said, the impact of Three Arrows’ sudden collapse led to a wave of withdrawals as customers lost faith in lending services, sparking BlockFi’s own insolvency crisis. Jun. On June 16, it was revealed BlockFi was one the many firms that liquidated Three Arrows because it had failed to meet a margin demand when the market crashed. Prince said that the Three Arrows saga “spread fear” in the market, before revealing that BlockFi suffered losses of $80 million in the fallout.
Prince also stated that although the two firms had reached a $680m deal, BlockFi hadn’t used any of its 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, Prince explained, was a key reason to add capital to the firm’s balance sheet.
Like BlockFi, Celsius, a crypto lender, also had insolvency problems in June. However, it chose to freeze customer withdrawals. The firm’s crisis is still ongoing. Babel Finance and CoinFLEX, two other cryptocurrency lenders, have also experienced insolvency in the recent market turmoil.