FTX could acquire BlockFi for $240 million

BlockFi, a cryptocurrency lender, could be acquired by FTX, one of the world’s leading cryptocurrency exchanges.

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Blockfi co-founder Zac Prince has announced that it has signed a formal deal with cryptocurrency company FTX.

According to Prince, this transaction currently requires shareholder approval. He added that the deal amounts to $ 680 million, but FTX can buy BlockFi for $ 240 million.

(Long thread!)

The latest information on previously announced term sheets @FTX_US And how did you expand the scope of your first transaction for all major gains? @BlockFi Stakeholders.

Zack Prince (@BlockFiZac) July 1, 2022

Prince said.

“Yesterday, subject to shareholder approval, 1. Acquired $ 400 million revolving credit facility subordinate to all client funds, and 2. BlockFi at variable prices up to $ 240 million, with FTX US. I have signed a final contract for options to do. About performance triggers. “

FTX has grown into one of the world’s leading cryptocurrency exchanges. FTX, led by Sam Bankman-Fried, has recently overtaken Coinbase to become the leading cryptocurrency exchange in the United States in terms of market capitalization.

BlockFi CEO added that the company has not yet used the line of credit. However, we have raised interest rates on Blockfi Interest Accounts (BIA). BlockFi wrote;

We continuously set interest rates based on the market dynamics of lending and borrowing. Our goal is to practice sound risk management and profit opportunities using the BlockFi Interest Account (BIA). On Friday, July 1, 2022, we will raise the rates of BTC, ETH, USDC, GUSD, PAX, BUSD, USDT in all tiers of the BlockFi Interest Account (BIA), and the rates of Tiers 2 and 3. Is the highest in substance. The amount of money for all tiers remains the same. “

Prince also quoted crypto lender Setsu and crypto hedge fund Three Arrows Capital (3AC) to explain the situation that put the company in its current predicament. BlockFi had zero exposure to Celsius, but the CEO said the withdrawal due to the freeze on Celsius increased the withdrawal rate on the BlockFi platform.

Finally, Prince explained why the company accepted the proposal proposed by FTX. He said;

“We were presented with a variety of unattractive options that could cut the client’s money or lag behind the lenders of the capital stack. These options were completely unacceptable to me, [Flori Marquez] And our board is at odds with our core value of “clients, not customers,” and the interests of Blockfi and our shareholders. “