BlockFi has announced that FTX.US would acquire the company for $240 million or more.
Friday, the CEO of the cryptocurrency lender Zac Prince, said on Twitter that FTX.US will acquire the company for up to $240 million dependent on certain “performance criteria.” Prince stated that BlockFi will obtain a $400 million revolving credit facility (FTX had granted BlockFi a $250 million credit line on June 21). The $240 million price tag represents a substantial drop from the prior value of BlockFi. The company was valued at $4.8 billion during a private funding round in July 2021.
The announcement of the $680 million acquisition follows a difficult month for BlockFi in June. Prince said that “crypto market volatility” had a detrimental effect on BlockFi prior to the acquisition. Although he mentioned Celsius and Three Arrows Capital’s bankruptcy difficulties, he underlined that BlockFi had no exposure to either company. Instead, he said that the effect of Three Arrows’ abrupt collapse resulted in a flood of withdrawals as clients lost trust in lending services, triggering BlockFi’s own bankruptcy problem.
BlockFi was one of the numerous corporations that liquidated Three Arrows on June 16 when the company failed to make a margin call due to the market crisis. Prince said that the Three Arrows incident “spread anxiety” across the industry before disclosing that BlockFi incurred $80 million in damages as a result.
Prince noted that while the companies had committed to a $680 million transaction, BlockFi had not used any of the credit lines. He went on to describe the company’s risk management measures and its “basic commitment to preserving consumer cash.” Prince emphasised that protecting consumers was a primary reason for adding capital to the company’s balance sheet.
Similar to BlockFi, the cryptocurrency lender Celsius encountered bankruptcy concerns in June but chose to halt client withdrawals instead. The company’s dilemma persists. In the last several weeks, other crypto lenders such as Babel Finance and CoinFLEX have encountered bankruptcy concerns due to the high market volatility.
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