FTX rescues BlockFi to the tune of $250 million
In a respite for the U.S. crypto lender, crypto exchange behemoth FTX provided BlockFi with a $250 million credit line.
“Today, BlockFi signed a term agreement with FTX to establish a $250 million revolving credit facility,” tweeted CEO Zach Prince on Tuesday. “This gives us access to cash that further strengthens our balance sheet and platform,” he added.
Crypto lenders, which offer high-yield accounts for cryptocurrency investors, have come under additional attention this month when Celsius froze withdrawals for its users on June 12. The next day, BlockFi revealed a 20% reduction in the workforce in an attempt to save expenses.
Prior to today’s agreement with FTX, BlockFi struggled to get a new round of venture capital. This month, sources informed The Block that the company may need to reduce its value in order to attract investors.
According to a story from the Financial Times, BlockFi was one of the firms that sold the collateral for a loan from Three Arrows Capital, a crypto hedge fund located in Singapore. According to the article, the business failed to satisfy a margin call on a bitcoin loan from BlockFi.
The cryptocurrency lender has just recruited a five-person policy team from the law and lobbying firm Arnold & Porter Kaye Scholer, including partner Mark Epley and congressional and public policy, practice chair Kevin O’Neill. Earlier this year, the US Securities and Exchange Commission imposed a record-breaking $100 million penalty.
The $250 million in revolving credit provided by FTX is anticipated to keep the lender viable as it works to address its solvency difficulties.
Prince suggested that the agreement might possibly lead to more collaboration with FTX, stating that it “unlocks future creativity and teamwork between BlockFi and FTX as we aim to promote global prosperity via crypto financial services.”