FTX US Closes Deal With BlockFi, Valuing The Troubled Crypto Lender at $680 Million

According to BlockFi's CEO, the agreement reached with FTX has "a total value of up to $680 million."

Bishal Kumar Chanda3 min read
FTX US Closes Deal With BlockFi, Valuing The Troubled Crypto Lender at $680 Million

On Friday, BlockFi CEO Zac Prince tweeted that the parties agreed to the "definitive agreement" a day prior. However, he added that it is still subject to shareholder approval.

Meanwhile, the deal includes a $400 million credit line. In addition, FTX has an option to acquire BlockFi at a "variable price of up to $240M based on performance triggers."

Zac Prince tweet on FTX partnership

BlockFi said in a press release that the deal, "together with other potential considerations, represents a total value of up to $680M."

The deal comes after FTX extended a $250 million credit facility to BlockFi after it announced liquidating a "large client". The client is likely to be the financially struggling crypto hedge fund Three Arrows Capital, which has heavily invested equity into BlockFi and borrowed from it.

"As a matter of principle, we fundamentally believe in protecting client funds. Not only because it's absolutely the right thing to do, but this also benefits the ongoing health and adoption of crypto financial services worldwide." Prince said in the tweet. "Therefore, it was important to add capital to our balance sheet to bolster liquidity and protect client funds."

BlockFi Incurs Losses Despite no Direct Exposure to Celsius or 3AC

According to a recent report from Nansen, Three Arrows Capital borrowed about $40 million from BlockFi on June 7. On Friday, Prince tweeted that BlockFi suffered $80 million in losses, twice what 3AC borrowed.

"Crypto market volatility, particularly market events related to Celsius and 3AC, had a negative impact on BlockFi," Prince added. "The Celsius news on June 12 started an uptick in client withdrawals from BlockFi's platform despite us having no exposure to them."

According to Crunchbase data, BlockFi's valuation after the series D funding round in March 2021 stood at $3 billion. However, BlockFi's valuation appears to be a moving target now.

Sam Bankman-Fried replied to Zac Prince

Recently, rumors spread that FTX is close to signing a deal to purchase BlockFi's remaining assets for $25 million. However, Prince confirmed the news as false, saying, "I can 100% confirm that we aren't being sold for $25M. I encourage everyone to trust only details that you hear directly from @BlockFi. We will share more [with] you as soon as we can."

The terms agreed to on Friday give BlockFi a "variable price of up to $240 million based on performance triggers." According to Prince, BlockFi has not yet drawn from the credit facility.

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