BlockFi is raising $500 million while KPMG conducts audit of Bitcoin rewards payment snafu

BlockFi is raising around $500 million in a funding round that gives the company at a pre-money valuation of $4.75 billion, according to a source with knowledge of the deal. 

The Series E raise, which was previously reported by The Information, is being co-led by Third Point — the hedge fund run by Dan Loeb — and London-based venture capital firm Hedosophia, according to the source. The firm announced a $350 million Series D raise in March.

Loeb recently also tweeted that he was exploring crypto. "I’ve been doing a deep dive into crypto lately," the hedge funder wrote. "It is a real test of being intellectually open to new and controversial ideas."

The fresh capital injection comes amid a lull in the price of bitcoin and other major cryptocurrencies. The deal is expected to close at the end of the month.

It also follows an embarrassing snafu at BlockFi. Last month, the firm erroneously sent some users payments denominated in bitcoin that were meant to be sent in cash. The payouts were apparently related to a March giveaway, in which qualifying customers were eligible for bitcoin rewards if they traded a certain volume during the period between March 18 and March 31.

In a note to potential investors about the raise, the firm said the mistake equated to a "loss exposure" of under $6 million. It said the move has "galvanized" the team "into action." KPMG, the accounting firm, has been brought on to conduct a full audit of the incident.