Michael Bodley

<div id="highlights-block_62bde067b3895" class="highlights">
 <ul>
 <li>FTX had earlier floated a $250 million line of credit to BlockFi in a bid to stabilize its bleeding cash flows</li>
 <li>The crypto lender has been one of a number of recent operators caught off guard by slumping crypto markets </li>
 </ul>
 
</div>



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.&nbsp;



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 <a href="https://cms.blockworks.co/celsius-clashes-with-lawyers-over-chapter-11-bankruptcy-report/">Celsius</a> and Three Arrows Capital.&nbsp;



BlockFi was a large lender to Three Arrows, which is currently undergoing a <a href="https://cms.blockworks.co/three-arrows-capital-ordered-into-liquidation-by-bvi-court-report/">court-mandated restructuring</a>.



“Three Arrows really created this contagion,” one source said.&nbsp;



The move was accelerated by rival cryptoasset managers <a href="https://cms.blockworks.co/blockfi-has-a-new-bidder-in-morgan-creek-report-says/" target="_blank" rel="noreferrer noopener">mounting competing bids</a> 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.&nbsp;



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.&nbsp;



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 <a href="https://www.cnbc.com/2022/06/30/ftx-closes-in-on-a-deal-to-buy-embattled-crypto-lender-blockfi-for-25-million-in-a-fire-sale.html" target="_blank" rel="noreferrer noopener">reported</a> 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 <a href="https://www.theblock.co/post/154929/ftx-blockfi-deal-sources" target="_blank" rel="noreferrer noopener">reported</a> the likelihood of the purchase for the same amount.&nbsp;



Sources for Blockworks requested anonymity to discuss sensitive business dealings. A spokesperson for FTX did not immediately have a comment.



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