FTX set to acquire BlockFi in a $680M deal

FTX has secured a deal with troubled crypto lending firm BlockFi. The deal will give this exchange the ability to acquire BlockFi. BlockFi has faced financial troubles recently following the ongoing market conditions in the crypto space.

FTX set to acquire FTX

The CEO of BlockFi, Zac Prince, released a Twitter thread saying that BlockFi had entered into a deal with FTX for a $400 million revolving credit facility. Moreover, the deal involved an option to acquire BlockFi “at a variable price of up to $240 million based on performance triggers.”

The CEO of the crypto lending firm said that the deal was part of the company’s plan to boost liquidity and protect its clients’ funds. The agreement deal has not been finalized because it still needs approval from shareholders.

The CEO attributed its financial woes to the ongoing market conditions and the liquidity issues Three Arrows Capital and the Celsius Network faced. The collapse of the 3AC and Celsius triggered BlockFi’s financial woes.

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BlockFi suffered losses of around $80 million following the action by Celsius to halt withdrawals. The company partnered with FTX after evaluating other “unattractive options.” Prince added that the platform would continue to operate normally.

“All of our products and services – including funding and withdrawals, our trading platform, credit card, and global institutional services – continue to operate normally, with incremental capital strength behind them,” Prince said.

Previous reports had said FTX would acquire BlockFi for $25M, with Prince criticizing these reports for being inaccurate. In June last year, BlockFi had a valuation of $5 billion, and the recent acquisition deal of $680M is still way below the company’s previous valuation.

BlockFi’s exposure to 3AC

BlockFi was among the companies that liquidated some of its positions with Three Arrows Capital. 3AC failed to meet margin calls from its lenders, which prompted several liquidations.

Due to its financial troubles, BlockFi announced it would lay off 20% of its staff and retain around 600 people. It is still unclear if the layoffs will still occur despite this deal with FTX.

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