Cryptocurrency News

FTX US Extends $400M Revolving Credit to BlockFi, Signs Option to Buy the Crypto Lender for $240M

By July 4, 2022 No Comments
FTX.US FTX image cover

FTX US has expanded on the previous deal made with a major cryptocurrency lending company BlockFi, upping the amount of the revolving credit from $250 million to $400 million. In addition, the new deal stipulates that FTX US can acquire BlockFi for a maximum amount of $240 million.

Key takeaways:

  • BlockFi is one of the major centralized cryptocurrency lenders that have come under fire in the past month. Recall that Voyager and Vauld halted operations on Friday and Monday, respectively. Meanwhile, Celsius paused withdrawals last month in response to “extreme market conditions.”
  • BlockFi has seen a drastic increase in the amount of user withdrawals over the past couple of weeks, leading to a significant liquidity crunch. Sam Bankman Fried’s FTX US has provided a lifeline, which allowed the firm to remain operational and to even increase its interest rates despite poor market conditions.
  • As a part of the new deal with FTX US, BlockFi has been granted access to $400 million in revolving credit facilities. According to BlockFi founders, the company had considerable exposure to the now bankrupt Three Arrows Capital (3AC) hedge fund, which is why “it was important to add capital to our balance sheet to bolster liquidity and protect client funds.”
  • The new deal reportedly involves a stipulation that the FTX US trading platform can acquire BlockFi for a maximum amount of $240 million, which showcases the severe drop in the company’s valuation. Per Crunchbase, BlockFi raised $500 million at a $4 billion valuation during its Series E round in August 2022. 
  • FTX US is an American arm of the international FTX cryptocurrency exchange. Helmed by CEO and founder Bankman-Fried, FTX US’ average daily volume grew 608% in 2021, during its first full year of operation.