FTX To Purchase BlockFi For Over $15M Or More Based On Performance
- The floor price for the US arm of the crypto exchange, FTX.US, acquisition deal with BlockFi is around the $15 million mark, which will change with performance.
- BlockFi has been given the option to buy itself back from FTX.US before October 2023 provided it pays almost “two to three times” the initial purchase amount.
Crypto exchange FTX is on track to purchase BlockFi, a crypto lending services platform that gained fame after the 2021 bull run. According to a new report, the floor price for the US arm of the crypto exchange, FTX.US, acquisition deal with BlockFi is around the $15 million mark. However, this price tag might change if the performance of the platform improves.
As per the report, leading crypto exchange FTX.US could buy the crypto lending platform for as little as $15 million. However, the original price that was circulated in the crypto community was around $240 million. It seems that the US arm of the crypto exchange is getting a fairly good deal following a bearish market.
The original acquisition deal was announced on July 1, 2022, when the CEO of BlockFi, Zac Prince, revealed that the $240 million deal was dependent on “performance triggers” and added that “crypto market volatility, particularly market events related to Celsius and 3AC, had a negative impact on BlockFi.”
BlockFi also received a $400 million rolling credit facility from the FTX crypto exchange, and in June, the crypto lending firm received a $250 million credit line from the crypto exchange as well. Interestingly, BlockFi was valued at around $4.8 billion after a funding round in 2021. This valuation was reduced to ashes, as now the firm is being purchased at a heavy discount of $15 million.
An interesting fact as per the report is that BlockFi will receive regulatory approval from the United States Securities and Exchange Commission (SEC) for its yield product, BlockFi Yield, by December 31, 2022, if the “performance triggers” go as expected. This would then bring an additional $25 million from FTX.US, which also aims to establish dominance in the United States along with rivals Binance.US and Coinbase.
The report also added that if the BlockFi client assets exceed $10 billion by October 2023, FTX would pay an additional sum of $100 million to the crypto lending platform. Lastly, FTX.US has also confirmed that it will pay a sum which will be equal to 25% of BlockFi’s annual operating income with a cap at $100 million.
If BlockFi fails in any of the above mentioned conditions, FTX won’t be dishing out a single penny to acquire the crypto lending platform other than the guaranteed $15 million. Although, according to the report, BlockFi has been given the option to buy itself back from FTX.US before October 2023 provided it pays almost “two to three times” the initial purchase amount.
This deal is a win-win scenario for FTX crypto exchange, which, following the acquisition, might be able to create a stronghold in the US.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
