What is Happening With FTX and BlockFi? Here is What We Know
- FTX reportedly offered to purchase BlockFi at $25 million, 99 percent cheaper than the alleged valuation. However, BlockFi’s CEO has refuted the claims.
Rumors out there are that FTX crypto exchange might soon buy distressed crypto lending platform, BlockFi, for $25 million. CNBC was the first media outlet to break the news. Inside sources say that the deal will likely be completed by the parties involved before the weekends.
If the rumors are true, that would be a big decline in the valuation of the crypto lending firm. Earlier this month, Blockfi was about to complete a funding series after being valued at $1 billion. However, its valuation as of March 2021 was $3 billion. Before that, pitchbook valued the new jersey-based crypto firm at $4.8 billion.
Another confidential source said there could be a change in the price tag before the week is over. The source also notes that it might take several months before acquisitions of this nature are over. The source added that one reason Blockfi was willing to complete the deal before the week was over since Friday signals the end of a quarter.
The sale rumors come about seven days after FTX provided Blockfi with a $250 million credit line. While speaking about the credit line, Sam Bankman-Fried (FTX CEO) said the credit would enable Blockfi to survive the crypto winter from a position of strength.
After FTX’s credit line facility to Blockfi, a wall street journal report said FTX would seek to own an equity stake in Blockfi in exchange for the credit line facility. Another report by the block claims that the two parties were already working on the deal.
An FTX representative told CNBC that the company would prefer not to comment on the issue. Also, a Blockfi representative told CNBC the same thing.
Blockfi CEO Denies Sales Reports
However, Blockfi CEO, Zac Prince, has denied the reports of Blockfi’s acquisition by FTX. Prince took to Twitter, saying he was sure no one was buying Blockfi for $25 million. He said no one should believe any information about the company unless it is the one shared on the platform’s official Twitter handle.
The continued decline in crypto asset prices has caused the downfall of many crypto lending firms, with this Blockfi matter being the latest fallout. With counterparties failing to meet margin calls, funds struggle with insolvency issues.
One of the biggest victims of the current crypto winter is the liquidation of the popular crypto hedge fund (Three Arrows Capital). A separate confidential source said Blockfi’s equity investors are already writing off their losses.
The source added that the term’s details didn’t include any “shop clause.” Hence, the firm’s management is considering other offers. According to the source, Blockfi has more than one bailout offer available.
Rebecca is a Senior Staff Writer at BitcoinWisdom, working hard to bring you the latest breaking news in the cryptocurrency market. In the words of Elon Musk “Buy stock in several companies that make products & services that *you* believe in. Only sell if you think their products & services are trending worse. Don’t panic when the market does. This will serve you well in the long-term.”
