Crypto News

BlockFi provides details on potential FTX purchase

The two parties have updated the previous term sheet as FTX will increase its revolving credit facility to $400 million. Additionally, the crypto exchange has an option to acquire BlockFi for up to $240 million in the future.

  • The crypto lender has been among the most struggling in the industry lately following the massive market crash. One of the first measures was to lay off 20% of the staff.
  • However, it seems the worst is yet to come as the company announced a few weeks later that it would receive a $250 million revolving credit facility from FTX. This type of loan essentially allows the recipient to withdraw money, use it to fund necessary operations, pay it back, and withdraw it again when needed.
  • Reports later surfaced that FTX will increase its commitment and actually buy BlockFi for $25 million — an amount well below the crypto lender’s announced valuation of over $3 billion last year. Despite this, BlockFi’s CEO – Zac Prince – denied the amount.
  • On Friday, Prince released a company announcement informing that the two parties have indeed reached an agreement on how to proceed.
  • FTX has increased its revolving credit facility to $400 million from $250 million. More importantly, the exchange now has an option to acquire BlockFi “at a variable price of up to $240 million based on performance triggers.” However, the publication did not provide for a reserve price.
  • BlockFi also said it did not withdraw any of the funds available in the lending facility. Aside from the market disadvantage, it also made Celsius Network and troubled hedge fund – Three Arrows Capital – responsible for his current situation.

“Crypto market volatility, particularly market events related to Celsius and 3AC, had a negative impact on BlockFi. The Celsius news on June 12 triggered a surge in customer withdrawals from the BlockFi platform, although we were not exposed to them.”

Source: Crypto News Deutsch

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