FTX Finalizes Deal With BlockFi, Option to Buy Up to $240 Million
Blockfi FTX Deal
Modified Date:- Published Date:-Categories: Cryptocurrency
FTX Finalizes Deal With BlockFi, Option to Buy Up to $240 Million
Troubled crypto lender BlockFi has signed a deal with FTX US, the US arm of Sam Bankman-Fried's crypto exchange, to extend its credit facility to BlockFi with an option for FTX to acquire the struggling lender. Following the May collapse of Terra Blockchain and the subsequent bankruptcy of the highly Luna-exposed Three Arrows Capital, BlockFi began to experience financial stress, for which BlockFi had made large loans.
These events – combined with recent protests against centralized lenders due to Celsius' liquidity crisis and general market collapse – have tested BlockFi's resilience and forced the lender to lay off about 20 percent of its workforce, about 170 employees. forced to. In June, FTX extended a US$250 million line of credit to BlockFi to help the lender secure client funds. With this new deal, the loan facility has been increased to US$ 400 million.
Prince added that the deal was primarily to ensure that BlockFi could protect client funds and that FTX was the ideal partner as it shares the same client-first value: “As a principle, we are basically clients. We believe in protecting the fund," Prince tweeted. “Not only because it is the right thing to do, but it also benefits from the ongoing worldwide health and adoption of crypto financial services.
Therefore, it was important to add capital to our balance sheet to increase liquidity and protect client funds." Claims of BlockFi's financial strength have been widely questioned on Twitter, with many users wondering if a company is allegedly a Why would demand an increased line of credit, a strong position and accept the option of availing it for a fraction of its valuation.
FTX has reached an agreement with BlockFi, granting the lender access to loans of up to $250 million on a chosen cryptocurrency platform. This move represents a major achievement for FTX, who sees the option of becoming a trustless lender as an advantage over traditional banking.