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The agreement between FTX US and BlockFi grants the crypto derivatives exchange the chance to acquire the loan company.
Zac Prince, CEO of BlockFi, said on Friday that the company has inked agreements with FTX US for a $400 million revolving credit facility and the option to buy BlockFi "at a variable price of up to $240 M based on performance triggers." According to BlockFi's CEO, the acquisition was made to " bolster liquidity and protect client funds."
The contracts are still contingent on shareholder approval. Prince stated that the decision was influenced by market volatility, "especially market movements relating to Celsius and 3AC," which had a detrimental impact on BlockFi. The crypto lending site lost over $80 million in the week after Celsius halted withdrawals, and after evaluating "several unappealing possibilities" for recovery, it joined with FTX US.
“All of our products and services — including funding and withdrawals, our trading platform, credit card, and global institutional services — continue to operate normally, with incremental capital strength behind them,” stated Prince.
In a blog post published Friday, BlockFi refuted Thursday’s allegations that FTX wanted to acquire the company for $25 million. According to the CEO, the sum of the $400 million credit facility, $240 million acquisition price, and “other potential considerations” for a firm valued at $5 billion in June 2021 was $680 million. Prince implied that the claim resulted from “an inappropriately leaked call” and “purely personal conjecture by a single party.”
In June, BlockFi was one of the first companies to liquidate part of Three Arrows Capital’s assets after the business failed to make margin calls from its lenders. In response to the market slump and high price volatility, the crypto lending company stated it would lay off 20% of its 850-person workforce, retaining 600 employees. It is unclear if the acquisition of FTX US would alter this decision.
