FTX.US strikes deal with Blockfi for acquisition.

FTX continues to dominate the space with the crypto lender’s CEO Zac Prince took to Twitter Friday to announce the update, revealing that FTX.US would be buying the firm for up to $240 million based on certain “performance triggers.” Prince added that BlockFi would receive a $400 million rolling credit facility (it was previously revealed on Jun. 21 that FTX had offered BlockFi a $250 million credit line). The $240 million price tag marks a heavy discount from BlockFi’s previous valuation. "This, together with other potential consideration, represents a total value of up to $680M," the firm said in an emailed statement.  The firm was valued at $4.8 billion after it raised funds in a private round in July 2021.

The news of the $680 million deal comes off the back of a rocky June for BlockFi. Prince said that “​​crypto market volatility” had negatively impacted BlockFi in the lead-up to the deal. Though he cited the insolvency issues Celsius and Three Arrows Capital faced, he clarified that BlockFi had no exposure to either firm. Instead, he said, the impact of Three Arrows’ sudden collapse led to a wave of withdrawals as customers lost faith in lending services, sparking BlockFi’s own insolvency crisis. On Jun. 16, it was revealed that BlockFi was one of several firms to liquidate Three Arrows as it failed to meet a margin call when the market crashed. Prince said that the Three Arrows saga “spread fear” in the market, before revealing that BlockFi suffered losses of $80 million in the fallout.

Similar to BlockFi, the crypto lender Celsius also faced insolvency issues in June, but it instead opted to freeze customer withdrawals. The firm’s crisis is still ongoing. Other crypto lenders such as Babel Finance and CoinFLEX have also faced insolvency issues in recent weeks amid extreme market turmoil.

BlockFi, similarly to other market participants in the crypto space, has been hit hard by the fall out of the liquidation of Three Arrows Capital and the liquidity struggles of rival lending firm Celsius, which paused withdrawals on customers earlier this month. Three Arrows Capital's liquidation event resulted in an $80 million loss for BlockFi, which the company described as a small fraction of losses reported by other lending firms.

BlockFi said that the firm has "no further exposure and the limited losses we did experience will be absorbed by BlockFi."

BlockFi said that the current deal with FTX will allow it to protect customer assets on the platform. 

BlockFi's Zac Prince said in a statement.

"We were presented with various unattractive options where client funds would take a haircut or be behind a lender in the capital stack. These alternatives were completely unacceptable to me, @FounderFlori and our Board and conflict with our core value of “Clients not Customers” as well as the interests of BlockFi and our shareholders."

"Ultimately, we found a great partner in @FTX_US, who shares our commitment to clients. This represents the best path forward for all @BlockFi stakeholders and the crypto ecosystem as a whole," Prince went on to write.