FTX US Has Agreed to Acquire Crypto Lender BlockFi for Up to $240 Million

Crypto lending companies like BlockFi have sufferred a great deal over the span of 2022 so far.

FTX US Has Agreed to Acquire Crypto Lender BlockFi for Up to $240 Million

Photo Credit: Facebook/ BlockFi

BlockFi said recent events that have caused market volatility in crypto

Highlights
  • Crypto lenders have been in a tough spot over the past couple of months
  • FTX has been linked to the procurement of BlockFi for days
  • The agreement also involves a $400 million revolving line of credit

FTX US, the US affiliate of cryptocurrency exchange operator FTX, has inked an agreement that gives it the option to buy cryptocurrency company BlockFi for up to $240 million (roughly Rs. 1,895 crore). FTX operates one of the largest cryptocurrency exchanges in the world. BlockFi, in turn, is a startup with a platform that enables users to buy, sell, and trade digital assets, as well as access cryptocurrency-backed loans. Reports that FTX may acquire the startup amid a selloff in cryptocurrencies first emerged earlier this week.

Previously, FTX provided a $250 million (roughly Rs. 1,974 crore) emergency line of credit to BlockFi. The company stated that the credit line is designed to help the startup "navigate the market from a position of strength."

If FTX US exercises its newly announced option to acquire BlockFi, the deal would be worth up to $240 million (roughly Rs. 1,895 crore). That price tag includes performance-based incentives. Separately, FTX US has agreed to provide the startup with a $400 million (roughly Rs. 3,157 crore) revolving credit facility.

BlockFi Chief Executive Officer Zac Prince provided more information on the factors that led to this week's deal with FTX in a series of tweets.

Prince stated that "crypto market volatility, particularly market events related to Celsius and 3AC, had a negative impact on BlockFi." Celsius Network LLC is a cryptocurrency loan company that last month froze withdrawals and transfers, while 3AC or Three Arrows Capital is a crypto hedge fund. Three Arrows Capital entered liquidation earlier this week.

“The Celsius news on 12 June started an uptick in client withdrawals from BlockFi's platform despite us having no exposure to them,” Prince wrote. “In the same week, 3AC news spread further fear in the market. While we were one of the first to fully accelerate our over-collateralised loan to 3AC, as well as liquidate and hedge all collateral, we did experience - $80 million (roughly Rs. 631 crore) in losses.”

As for the deal with FTX, Prince stated that BlockFi has not drawn on the $400 million (roughly Rs. 3,157 crore) revolving credit facility provided by the cryptocurrency exchange operator. The executive added that all BlockFi's products and services will continue to operate as usual.

“The FTX US platform and products are highly complementary to BlockFi and we anticipate enhancements to our services through increased collaboration,” Prince added.


What are the best tablets? We discuss this on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks. The information provided in the article is not intended to be and does not constitute financial advice, trading advice or any other advice or recommendation of any sort offered or endorsed by NDTV. NDTV shall not be responsible for any loss arising from any investment based on any perceived recommendation, forecast or any other information contained in the article.

Affiliate links may be automatically generated - see our ethics statement for details.
Comments

For the latest tech news and reviews, follow Gadgets 360 on Twitter, Facebook, and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel.

Further reading: Cryptocurrency, BlockFi, Crypto lender, FTX
Shomik Sen Bhattacharjee
Shomik is a senior sub-editor at Gadgets 360. As someone who's screened the consumer tech space for the past four years, he's now shifted focus to the crypto-verse. When not converting currency values in his head, you may find him in an intense five-a-side football match or grinding out the newest Destiny 2 weekly challenge on his Xbox. You can reach him for tips or queries at ShomikB@ndtv.com. More
Asus ROG Phone 6, ROG Phone 6 Pro With Snapdragon 8+ Gen 1 SoC Launched in India: Price, Specifications
Share on Facebook Tweet Snapchat Share Reddit Comment google-newsGoogle News

Advertisement

Follow Us

Advertisement

© Copyright Red Pixels Ventures Limited 2022. All rights reserved.