FTX Rescues Shaky Finance BlockFi in a $680 Million Deal

FTX Rescues Shaky Finance BlockFi in a $680 Million Deal

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Since the inception of the current market downturn, the crypto community has been witnessing chaos that requires traders’ and investors’ additional strength to stabilize their emotions, many crypto firms have been in a state of discombobulation, but the chaos seems to be hitting the crypto lending firms differently.

The unsettled crypto lending firm, BlockFi in the last weeks has been struggling to survive the current wave of the market downturn, leaving many of its users in fear, thanks to the leadership of BlockFi Inc. for not letting down their users.

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FTX.US Tied up Deal With BlockFi

On Friday, the crypto lending platform announced on Twitter that it has reached an agreement with Sam Bankman-Fried’s FTX.US, a deal that will aid in the sustainability of BlockFi.

The CEO of the lending firm Zac Prince, on Twitter, said that BlockFi has signed a deal worth $680 million with FTX.US, the deal however includes a $400 million revolving credit facility as well as an option to acquire at varying prices which can be up to $240 million.

In a series of tweets, Prince described the FTX.US line of credit as a just-in-case arrangement and implied that BlockFi’s operations are steady.

“We have not drawn on this credit facility to date and have continued to operate all our products and services normally. In fact, we raised interest rates, effective today, across the board for major assets,” he tweeted.

This news however came up following the CNBC reports earlier this week that FTX.US is allegedly acquiring BlockFi for about $25 million, a report that left many in shock due to the reported amount, this report was later denied by BlockFi’s CEO.

BlockFi seemed to announce it had exposure to struggling hedge fund Three Arrows Capital (3AC) and disclosed it had signed a term sheet with massive cryptocurrency exchange FTX to secure a $250 million revolving line of credit.

“While we were one of the first to fully accelerate our overcollateralized loan to 3AC, as well as liquidate and hedge all collateral, we did experience ~$80M in losses, which is a small fraction of losses publicly reported by other lenders,” Prince tweeted. 

“This represents the full extent of the impact to BlockFi from 3AC. We have no further exposure and the limited losses we did experience will be absorbed by BlockFi with no impact on client funds. Our 3AC losses will be part of 3AC’s ongoing bankruptcy case(s) so more info will surely come out as those cases proceed.”

FTX crypto exchange has been on its toes for expansion globally, This deal, however, will give Sam Bankman-Fried’s FTX a good chance to expand its reach.

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