Crypto Exchange FTX To Acquire Beleaguered Lender BlockFi

The sale’s timeline was accelerated after competitors mounted rival bids, three sources told Blockworks

share

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.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research report - cover graphics (1).jpg

Research

In this report, we dive into crypto private market data to gather insights on where the future of the industry is headed. Despite a notable downturn in private raises, capital continues to infuse promising projects that aim to transform payments, banking, consumer experiences, community, and more, with 2023 being the fourth-largest year for crypto venture capital.

article-image

Ethereum Dencun will enable Ethereum transactions to be submitted as blobs, potentially alleviating the costs of posting data on the blockchain

article-image

After a rocky start, bitcoin ETF shareholders are now well in the green

article-image

Revolut said that the standalone crypto exchange is currently “invite only”

article-image

The stock price jump comes after Coinbase reported ending its seven-quarter run of net losses during the fourth quarter

article-image

BUZZ holds shares of Coinbase, Robinhood and MicroStrategy

article-image

Opinion: Even though I didn’t pay for my “Diamond Hands” burger with BTC, don’t let that fool you into thinking that crypto’s development is futile