FTX in talks to acquire BlockFi stake, Wall Street Journal reports

Quick Take

  • FTX prepares to take a stake in BlockFi days after it agreed to a bailout, according to the Wall Street Journal.

FTX is considering taking a stake in crypto lender BlockFi, according to a report by the Wall Street Journal on Friday. 

Sam Bankman-Fried's crypto exchange provided a $250 million credit line to BlockFi earlier this week after the lending platform faced liquidity issues. The revolving credit from FTX was expected to keep the lender afloat as it worked to improve its solvency issues, although at the time both companies hinted at future cooperation.

Sam Bankman-Fried tweeted that “going forward, we’re excited to partner with BlockFi to offer industry leading products." Something which had previously been mooted by Zac Prince, CEO and founder of BlockFi. 

Prior to the announcement of the credit line from FTX sources had told The Block that the lending platform was struggling to close its latest round of venture funding. 

This came as crypto lending platforms, which has become known for their high-yield savings accounts, came under scrutiny following Celsisus halting withdrawals for its customers. 

Celsius made this announcement on June 12 and the next day on June 13 BlockFi announced that it would cut about 20% of its staff in a cost saving measure.

FTX and its CEO have been busy doing deals amid fears of wider contagion across the crypto over the past few weeks. Bankman-Fried’s Alameda Research signed a non-binding term sheet with crypto brokerage Voyager Digital last week to provide a revolving line of credit to the firm. 

FTX declined to comment on the WSJ report. 

BlockFi declined to comment on “market rumors” when approached by The Block, noting that they were still negotiating the terms of the deal with FTX and as such were unable to share more information. The firm anticipates sharing more information at a later date. 

Amid the turmoil BlockFi announced a rate increase for certain cryptocurrencies from next month. With rates on all tiers for bitcoin, ether, USDC, GUSD, paxos, BUSD and USDT increasing. Previously these rates dropped due to waning institutional demand.

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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