In a relief for the US crypto lender, BlockFi got a $250 million credit facility from crypto exchange giant FTX.
On Tuesday, CEO Zac Prince tweeted, “Today BlockFi signed a term sheet with FTX to establish a $250 million revolving credit facility, providing us with access to cash that further bolsters our balance sheet and platform strength.”
Crypto lenders, which offer high-yield accounts for crypto investors, have come under additional attention this month when Celsius stopped accepting withdrawals on June 12. BlockFi said the following day that it would be laying off around 20% of its employees in order to save money.
BlockFi has been struggling to clinch a new round of venture capital before today’s arrangement with FTX. This month, sources told The Block that the company might have to lower its valuation to entice investors.
According to the Financial Times, BlockFi was one of the companies that liquidated the collateral on a loan from Singapore-based crypto hedge fund Three Arrows Capital. According to the article, the company borrowed bitcoin from BlockFi but failed to meet a margin call on the loan.
Arnold & Porter Kaye Scholer, a legal and lobbying company, recently hired a five-person policy team from the crypto lender, including partner Mark Epley and legislative and public policy practice group chair Kevin O’Neill. This comes after the US Securities and Exchange Commission imposed a record $100 million penalties earlier this year.
FTX’s $250 million revolving loan is designed to keep the lender afloat as it attempts to resolve its solvency difficulties.
Later, FTX CEO Sam Bankman-Fried tweeted that his firm was teaming up with BlockFi to “manage the market from a position of strength.” He continued by stating that the lender is financially sound, that operations are routine, and that all assets are secure.
Prince hinted that the agreement might lead to more collaboration with FTX, adding that it “unlocks future collaboration and innovation between BlockFi and FTX as we aim to advance global prosperity through crypto financial services.” “Going forward, we’re delighted to join with BlockFi to offer industry leading products,” Bankman-Fried said.
