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FTX US deal with struggling crypto lender BlockFi floats acquisition with purchase price ‘up to’ $240M – TechCrunch

FTX US deal with struggling crypto lender BlockFi floats acquisition with purchase price ‘up to’ $240M – TechCrunch

 


Sam Bankman-Fried’s FTX is taking advantage of the runaway instability in the crypto lending market to assert itself while backing big institutions.

The company’s US arm has reached a deal with struggling crypto lender BlockFi that gives them the option to buy the recently $2 billion-valued startup for up to $240 million depending on how well it performs. the startup. BlockFi CEO Zac Prince did not reveal what the bottom of the deal might look like in a thread leaking the term sheet on Twitter. The announcement comes after a CNBC report yesterday pegged the deal at $25 million.

Along with the acquisition potential, with the deal, FTX US is providing BlockFi with a $400 million revolving credit facility to shore up its finances amid market uncertainty.

Yesterday, we signed definitive agreements, subject to shareholder approval, with FTX US to:

1. A $400 million revolving credit facility that is subordinated to all customer funds, and2. An option to acquire BlockFi at a variable price of up to $240 million based on performance triggers.

— Zac Prince (@BlockFiZac) July 1, 2022

This is a dramatic turning point for the centralized exchange that allowed users to buy, sell and earn cryptocurrencies. In a thread, Prince pointed out “[c]rypto market volatility, particularly Celsius and 3AC-related market events” as catalysts for the company’s financial troubles that led to clients withdrawing their funds from the platform. The ongoing collapse of crypto hedge fund 3AC has resulted in losses of around $80 million for BlockFi, Prince notes.

While the deal appears to be far from a happy ending for BlockFi’s backers, it’s likely a breath of relief for customers who still hold funds with the lender.

“As a matter of principle, we fundamentally believe in protecting client funds. Not only because it is absolutely the right thing to do, but it also benefits the continued health and adoption of crypto financial services around the world,” says Prince.

For FTX CEO Sam Bankman-Fried, the deal represents another opportunity for his crypto exchange to expand its ambitions as its main competitor in the United States reels from its boom and bust in the markets. American audiences.

Subscribe to the TechCrunchs “Chain Reaction” crypto newsletter for news, funding updates, and takes on the wild world of web3 – and listen to our companion podcast!

Sources

1/ https://Google.com/

2/ https://techcrunch.com/2022/07/01/ftx-us-deal-with-troubled-crypto-lender-blockfi-floats-acquisition-with-up-to-240m-purchase-price/

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