BlockFi Secures $250 Million Line Of Credit From FTX Amid Bear Market

Crypto lending platform BlockFi announced securing a $250 million revolving line of credit from crypto exchange FTX.

Bishal Kumar Chanda3 min read
BlockFi Secures $250 Million Line Of Credit From FTX Amid Bear Market

Crypto lending platform BlockFi announced securing a $250 million revolving line of credit from crypto exchange FTX. BlockFi CEO Zac Prince shared the news on Tuesday, along with a subsequent press release from the company.

BlockFi secures $250 million from FTX.

Prince said the move "further bolsters our balance sheet and platform strength."

He added that "the proceeds of the credit facility are intended to be contractually subordinate to all client balances." It means the crypto lender will satisfy its obligations on client accounts, including BlockFi Interest Accounts, BlockFi Personalized Yield, and loan collateral, before paying FTX.

The $250 million credit for BlockFi comes amid a greater market turmoil. In fact, BlockFi has joined the growing list of firms that are reducing their workforce and making crucial changes. Reportedly, the firm has cut its staff by "roughly 20%."

Future Collaboration Between BlockFi and FTX

In announcing the latest round of credit, Prince hinted it could result in a partnership between BlockFi and FTX. He said on Twitter, "This agreement also unlocks future collaboration and innovation between BlockFi & FTX as we work to accelerate prosperity worldwide through crypto financial services."

Notably, the feeling seems to be mutual. FTX CEO said that the crypto exchange is "responsible" for bailing out struggling firms during the bear market.

However, while FTX is positioned to stop the broader market crash, it is reportedly one of the firms that liquidated Celsius.

"Even if we weren't the ones who caused it, or weren't involved in it," he said. "I think that's what's healthy for the ecosystem, and I want to do what can help it grow and thrive."

This wasn't the first time FTX CEO Sam Bankman-Fried stepped in and bailed out a major crypto firm suffering from the market downturn. Last week, crypto broker Voyager Digital revolving line of credit with Alameda Research, a quant trading shop founded by Bankman-Fried.

Crypto Lenders Hit Hard

Crypto lending platform Celsius, one of BlockFi's competitors, reportedly ran out of funds to repay depositors after taking a series of risky DeFi bets. Last Sunday, Celsius paused all withdrawals, swaps, and transfers to help it sustain "extreme market conditions."

Yesterday, the company said it needs more time to stabilize before unfreezing user accounts.

Meanwhile, BlockFi has its own inconveniences. In February this year, BlockFi agreed to pay $100 million in penalties after the SEC deemed its high-yield interest accounts as security products. Last week, BlockFi paid $1 million to the Iowa Insurance Division as part of the larger $100 million penalty.

Last week, BlockFi was forced to liquidate a large client that "failed to meet its obligations on an overcollateralized loan." The statement came amid speculations surrounding the potential insolvency of 3AC.

Get deals in your inbox

Get our free, 5 min weekly newsletter. Used by thousands of people to earn more interest on their crypto.

No spam, unsubscribe anytime. Read our Privacy Policy.