(Reuters) -BlockFi has signed a term sheet with digital asset exchange FTX for a $250 million revolving credit facility, the cryptocurrency firm's chief executive officer, Zac Prince, said in a tweet https://twitter.com/BlockFiZac/status/1539216594383028224 on Tuesday.
The agreement will give BlockFi access to capital amid a rout in the digital currency market. Last week, the company said it was reducing its headcount by about 20%, in addition to implementing other cost-cutting measures like reducing marketing spending and executive compensation.
FTX Founder and CEO Sam Bankman-Fried said in a tweet https://twitter.com/sbf_ftx/status/1539268631095152642?s=21&t=6IKWqlgii1rM5BTAmAFCEg that the credit facility will enable BlockFi to "navigate the market from a position of strength."
Aggressive rate hikes by the U.S. Federal Reserve and recession fears have led to a turmoil in equities and sparked a sell-off in crytocurrencies. Over the weekend, the world's biggest cryptocurrency, bitcoin, dropped below the key $20,000 level for the first time since December 2020.
The crypto winter has also hurt other major players like Coinbase Global Inc, which last week said it would cut about 18% of its workforce.
Companies use revolving credit facilities as backstop financing to combat adverse impacts on other sources of income. For the most part, these facilities remain undrawn.
(Reporting by Niket Nishant in Bengaluru and Hannah Lang in Washington; Editing by Maju Samuel)