Crypto Exchange FTX To Acquire Beleaguered Lender BlockFi
The sale’s timeline was accelerated after competitors mounted rival bids, three sources told Blockworks
key takeaways
- FTX had earlier floated a $250 million line of credit to BlockFi in a bid to stabilize its bleeding cash flows
- The crypto lender has been one of a number of recent operators caught off guard by slumping crypto markets
Cryptocurrency exchange FTX has accelerated its shopping spree with a soon-to-be finalized purchase of beleaguered digital assets lender BlockFi, according to three sources familiar with the matter.
The move comes after FTX founder Sam Bankman-Fried lined up a $250 million emergency cash infusion for BlockFi, which — like scores of competitors — has found itself deeply underwater given the market turbulence surrounding Celsius and Three Arrows Capital.
BlockFi was a large lender to Three Arrows, which is currently undergoing a court-mandated restructuring.
“Three Arrows really created this contagion,” one source said.
The move was accelerated by rival cryptoasset managers mounting competing bids for BlockFi — as those operators attempted to stop FTX from using debt-to-equity convertible notes, which would have diluted their own stakes in the company.
The acquisition, for BlockFi, would likely involve additional layoffs, sources said, adding Bankman-Fried is predominantly interested in profiting from the company’s technology, investors and counterparties. A spokesperson for BlockFi told Blockworks the company “does not comment on market rumors” and denied the prospect of staff cuts, citing a statement from the firm’s chief executive.
Earlier reports, citing a leaked investment call from BlockFi backer Morgan Creek Capital, said the deal would trigger a large number of layoffs.
CNBC first reported the deal, referencing anonymous sources to peg the price tag at approximately $25 million — an astonishing 99% decrease from its earlier valuation. The Block earlier reported the likelihood of the purchase for the same amount.
Sources for Blockworks requested anonymity to discuss sensitive business dealings. A spokesperson for FTX did not immediately have a comment.
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