BlockFi’s Valuation Tumbles to $1 Billion From $3 Billion in Latest Funding Round
Cryptocurrency lending platform BlockFi is set to complete financing at a much lower valuation than its previous funding rounds.
The latest financing round is set to value the lender at $1 billion, marking a so-called “down round” – which refers to instances where a company intends to raise additional capital and sees its valuation fall below the mark it was during previous funding.
The company nabbed $350 million at a valuation of more than $3 billion in March 2021 and was looking to raise an additional $500 million in late July, which would take its valuation to almost $5 billion. BlockFi also hinted at plans to go public last year.
However, the down round indicates a more difficult crypto environment at the moment, as well as regulatory concerns over crypto lenders that provide high-interest payouts for crypto holdings.
Even more importantly, the “down round” indicates the tightening financial conditions around the globe as central banks race to hike interest rates in a bid to halt soaring inflation.
Challenges in the crypto world emerged just months after the industry saw significant levels of venture capital activity. In the past year, numerous companies in the crypto market boosted their valuations above $1 billion, such as the crypto exchange Gemini and data analytics firm Dune Analytics.
Earlier this year, BlockFi paid a $100 million fine to the U.S. Securities and Exchange Commission (SEC) and multiple state regulators after it a probe into whether its high-yield lending solution was a securities offering.
The company’s lending product, which provides yields of as much as 9.5%, has been under investigation since last fall.
“We have been in productive ongoing dialogue with regulators at the federal and state level. We do not comment on market rumors. We can confirm that clients’ assets are safeguarded on the BlockFi platform and BlockFi Interest Account clients will continue to earn crypto interest as they always have,”BlockFi said when asked about its settlement with the SEC and regulators.