Cryptocurrency lender BlockFi could be acquired by FTX, one of the leading crypto exchanges in the world.
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Blockfi’s co-founder Zac Prince, has revealed that the company has signed definitive agreements with the crypto firm FTX.
According to Prince, the deal is currently up to shareholder approval. He added that the deal represents a total of $680 million but FTX can acquire BlockFi for $240 million.
(Long thread!)
Excited to share an update on our previously announced term sheet with @FTX_US &- and how we've broadened the scope of the initial deal for the benefit of all key @BlockFi stakeholders.
— Zac Prince (@BlockFiZac) July 1, 2022
Prince said;
“Yesterday we signed definitive agreements, subject to shareholder approval, with FTX US for 1. A $400M revolving credit facility which is subordinate to all client funds, and 2. An option to acquire BlockFi at a variable price of up to $240M based on performance triggers.”
FTX has grown to become one of the leading cryptocurrency exchanges in the world. Led by Sam Bankman-Fried, FTX recently overtook Coinbase to become the leading crypto exchange in the United States in terms of market cap.&
The BlockFi CEO added that the firm is yet to draw on the credit facility. However, it has raised the interest rates for its Blockfi Interest Accounts (BIAs). BlockFi wrote;
“We continually set rates based on market dynamics for lending and borrowing. Our goal is to practice sound risk management and maintain earning opportunities for you with our BlockFi Interest Account (BIA). On Friday, July 1, 2022, we’re increasing our rates for BTC, ETH, USDC, GUSD, PAX, BUSD, and USDT across all tiers in the BlockFi Interest Account (BIA), with Tier 2 and 3 rate increases the most substantial. All tier amounts remain the same.”
Prince also explained the situations that put the firm in its current predicament, citing the crypto lender Celsius and the crypto hedge fund Three Arrows Capital (3AC). Although BlockFi had zero exposures to Celsius, the CEO said that Celsius freezing withdrawals resulted in an increased rate of withdrawals on the BlockFi platform.&
Finally, Prince explained why the company accepted the proposal put forward by FTX. he said;
“We were presented with various unattractive options where client funds would take a haircut or be behind a lender in the capital stack. These alternatives were completely unacceptable to me, [Flori Marquez] and our board and conflict with our core value of ‘Clients not Customers’ as well as the interests of Blockfi and our shareholders.”
The post FTX has an option to acquire BlockFi for $240m, says BlockFi’s CEO appeared first on CoinJournal.
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