FTX US has signed an agreement with BlockFi that will give the crypto derivatives exchange the option to buy the digital currency lending company.
In a Twitter thread on Friday, BlockFi CEO, Zack Prince, said that the crypto lending firm had entered into agreements with FTX US for a $400 million revolving credit facility, as well as the option to acquire BlockFi “at a variable price of up to $240 million based on performance triggers.” According to the CEO, the deal was reached as part of an effort “to bolster liquidity and protect customer funds” at BlockFi.
The deals are still subject to shareholder approval. Prince said volatility in the cryptocurrency market, “particularly market events related to Celsius and 3AC,” which had a negative impact on BlockFi, led to the decision. The cryptocurrency lending platform suffered roughly $80 million in losses the week following Celsius’ withdrawal pause, and, after considering “several unappealing options” for recovery, partnered with FTX US.
“All of our products and services – including funding and withdrawals, our trading platform, credit card and global institutional services – continue to function as normal, with a growing capital force behind them,” Prince said.
Yesterday we signed definitive agreements, subject to shareholder approval, with FTX US for:
1. A $400M revolving credit facility which is subordinate to all client funds, and
2. An option to acquire BlockFi at a variable price of up to $240M based on performance triggers.— Zac Prince (@BlockFiZac) July 1, 2022
In a blog post on Friday, BlockFi criticized news on Thursday that FTX intended to buy the firm for $25 million. According to the CEO, the $400 million credit facility, $240 million acquisition price, and “other potential consideration” totaled $680 million, for a company that was valued at $5 billion as of June 2021. Prince hinted that the news was due to “an inappropriately screened call” and “purely personal conjecture on one side.”
BlockFi was one of the first companies to liquidate some of Three Arrows Capital’s positions in June, after the company reportedly was unable to meet margin requests from its lenders. Amid the market crash and extreme price volatility, the crypto lending firm announced that it would lay off 20% of its 850-strong staff, keeping around 600. It is not entirely clear whether an acquisition of FTX US would change this decision.
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