Crypto lender BlockFi is set to close a down round, where the firm will raise funds at a lower valuation than its previous raises. Also, BlockFi is reducing its headcount by about 20% due to worsening macroeconomic conditions.
BlockFi Valuation Sinks To $1 Billion In Latest funding Round
Founded by Zac Prince and Flori Marquez in 2017, the firm enables users to borrow funds against their crypto holdings. In March 2021, BlockFi announced raising $350 million at a $3 billion valuation. The firm was in its rapid growth phase at that time with a $10 billion loan book and 265,000 retail accounts.
Reportedly, BlockFi raised $500 million last year at a valuation of over $5 billion. It represents the compression value that has hit the public markets and is making its way to the private markets.
According to sources, venture investment firm Bain Capital Ventures will lead the new round with participation from DST and Valar. The round will value the New Jersey-based firm at $1 billion. However, the crypto lender refused to comment, saying, "BlockFi does not comment on market rumors."
Moreover, BlockFi's lower valuation points to a more challenging atmosphere in the crypto market. Additionally, it's more difficult due to the regulatory uncertainty surrounding firms such as BlockFi, which offers high-yielding crypto products.
BlockFi Cuts Headcount Amid Crypto Downturn
As per a Monday blog post by BlockFi founders Zac Prince and Flori Marquez, BlockFi is letting go of 20% of its workforce. Through this move, the firm aims to achieve profitability in a challenging macroeconomic environment. The blog stated that the layoffs would impact every team in the firm.
The blog blamed a "dramatic pull back in equity and crypto markets" that forced BlockFi to "review strategic priorities." This move is expected to help the firm endure "what many expect to be an extended global recession."
Meanwhile, BlockFi has also implemented other cost-cutting measures to bring expenses down. It includes reducing marketing spending and executive compensation, eliminating non-critical vendors, and slowing headcount growth.
"Our clients will not experience any material changes to the quality of service they have come to expect, their funds are safeguarded, and all platforms and products continue to operate normally," Prince said.
Furthermore, this news came just hours after crypto lender Celsius froze fund withdrawals amid "extreme market conditions." However, BlockFi has already published a statement saying it has "no exposure to Celsius and never worked with them as a partner."
Also, BlockFi is not the only crypto lending firm to slash its headcount in the recent market downturn. Not long ago, Coinbase took a controversial step to rescind all of its employment offers in early June. On Friday, Crypto.com also announced laying off 5% of its employees.