The crypto lender signed definitive agreements with FTX US for a US$400 million revolving credit facility that will be subordinate to all client funds. The crypto exchange also has an option to acquire BlockFi for about US$240 million based on performance targets.
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Client funds will be prioritized as part of the deal, BlockFi CEO and founder Zac Prince said on Saturday, expanding on a previous term sheet for a US$250 million revolving credit facility from the cryptocurrency exchange.
BlockFi has not drawn on this credit facility to date and continues to operate all products and services normally, Prince said.
However, the crypto lender did book about US$80 million in losses, a fraction of what other lenders publicly reported, he said.
News of Celsius Network pausing withdrawals and transfers led to “an uptick in client withdrawals” from BlockFi’s platform, Prince said.
It wasn’t immediately clear if FTX’s option to buy BlockFi compensates only the investors in the senior-most tranche of the company’s latest raise.
BlockFi investor Morgan Creek previously said it was preparing a counter offer as FTX’s term sheet would allow it to buy the crypto lender “at essentially zero price,” according to a CoinDesk report of a leaked call between the U.S. asset manager and its investors.
“I am extraordinarily disappointed that an inappropriately leaked call led to reporting on potential negative impacts to the BlockFi team,” Prince said on Saturday. “These comments were purely personal conjecture by a single party and were subsequently retracted.”
Morgan Creek did not immediately respond to Forkast’s request for a comment in an email sent outside of normal U.S. business hours.
Crypto market volatility, and market events such as the Celsius and Three Arrows Capital (3AC) withdrawal freeze, accelerated withdrawals on BlockFi’s platform in June and led to a roughly 20% cut in staff.
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