BlockFi secured a $250 million credit facility from crypto exchange giant FTX in a reprieve for the US crypto lender.
"Today BlockFi signed a term sheet with FTX to secure a $250m revolving credit facility providing us with access to capital that further bolsters our balance sheet and platform strength," CEO Zac Prince tweeted on Tuesday.
Crypto lenders, which provide high-yield accounts for crypto investors, have come under renewed scrutiny this month as Celsius halted withdrawals for its customers on June 12. The next day, BlockFi announced it would cut about 20% of staff in an effort to trim costs.
Before today’s deal with FTX, BlockFi had been struggling to close a fresh round of venture funding. Sources told The Block this month that the firm was facing having to cut its valuation to win over investors.
BlockFi was one of the companies that liquidated the collateral on a loan from Singapore-based crypto hedge fund Three Arrows Capital, according to a report from the Financial Times. The company borrowed bitcoin from BlockFi but failed to meet a margin call on that loan, according to the report.
The crypto lender recently hired a five-person policy team from legal and lobbying firm, Arnold & Porter Kaye Scholer, which included partner Mark Epley and legislative and public policy practice group chair Kevin O’Neill. This follows a record $100 million fine received from the US Securities and Exchange Commission earlier this year.
The $250 million in revolving credit from FTX is expected to keep the lender afloat as it works to improve its solvency issues.
FTX CEO Sam Bankman-Fried later tweeted that his company was partnering with BlockFi to allow them to "navigate the market from a position of strength." He went on to say the lender is financially strong, operations are normal and all assets are safe.
Prince hinted that the deal could also lead to further cooperation with FTX, saying it “unlocks future collaboration and innovation between BlockFi and FTX as we work to accelerate prosperity worldwide through crypto financial services.” Bankman-Fried echoed this sentiment saying that "going forward, we’re excited to partner with BlockFi to offer industry leading products."
Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.
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