Crypto lender BlockFi gets $250m lifeline from trading powerhouse FTX
Troubled crypto firm says the ‘landmark’ revolving credit facility will help bolster its balance sheet
One of the biggest crypto lenders, BlockFi, said on Tuesday digital-asset trading powerhouse FTX agreed to provide a $250m revolving credit facility as concern increases across the sector about liquidity in the wake of the recent collapse in token prices.
Rival lenders Celsius and Babel Finance froze withdrawals on their platforms in the past two weeks as the months-long meltdown in the prices of cryptocurrencies accelerated, triggering speculation that other crypto companies would be forced to take similar measures.
Sam Bankman-Fried, the billionaire co-founder and CEO of FTX, said in a tweet that the exchange provided the support to help New Jersey-based BlockFi “navigate the market from a position of strength”.
“Sometimes leadership means acting decisively and that’s what BlockFi did: removing troublesome counterparties _before_ they become a problem, and adding cash _before_ it was necessary,” he added in the thread.
Alameda Research, the crypto trading shop also cofounded by Bankman-Fried, issued a $485m loan to crypto broker Voyager Digital on June 18.
Zac Prince, co-founder and CEO of BlockFi, said on Twitter that his firm has signed a term sheet with FTX to provide BlockFi with access to capital “that further bolsters” the crypto lender’s balance sheet.
“Today’s landmark announcement reinforces BlockFi’s commitment to serving its clients and ensuring their funds are safeguarded,” Prince said.
BlockFi recently acknowledged that it had to liquidate “a large client” that failed to meet its obligations on an overcollateralised margin loan without naming the customer. At the time, Prince said that BlockFi continues to actively “lend and operate normally”.
BlockFi cited “market conditions that have had a negative impact on our growth rate” for its decision on June 13 to cut about 20% of its workforce, or about 200 positions.
The company agreed in February to pay $100m in penalties following the US Securities and Exchange Commission’s allegations that it was selling its crypto lending product as an unregistered security.
Bloomberg News. More stories like this are available on bloomberg.com
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