Sam Bankman-Fried’s FTX is taking advantage of rampant instability in the crypto lending market to assert itself while propping up major institutions.
The company’s US-based arm has a deal in place with troubled crypto lender BlockFi that gives them the option to buy the startup, recently valued at $2 billion, for up to $240 million based on the startup’s performance. BlockFi CEO Zac Prince did not disclose what the low end of the deal could look like in a thread disclosing the term sheet on Twitter. This announcement comes after a CNBC report yesterday pegged the deal at $25 million.
Alongside the potential for an acquisition, with the deal FTX US is giving BlockFi a $400M revolving credit facility to shore up its finances in the midst of market uncertainty.
It’s a dramatic turn for the centralized exchange which allowed users to buy, sell and earn cryptocurrencies. In a thread, Prince pointed to”[c]rypto market volatility, particularly market events related to Celsius and 3AC” as catalysts for the company’s financial troubles which led to clients withdrawing their funds from the platform. The crypto hedge fund 3AC’s ongoing collapse led to roughly $80 million in losses for BlockFi, Prince notes.
While the deal appears to be far from a happy ending for BlockFi’s venture backers, it’s likely a breath of relief for customers still holding funds with the lender.
“As a matter of principle, we fundamentally believe in protecting client funds. Not only because it’s absolutely the right thing to do, but this also benefits the ongoing health and adoption of crypto financial services worldwide,” Prince says.
For FTX CEO Sam Bankman-Fried, the deal represents another opportunity for his crypto exchange to expand its ambitions as its chief stateside competitor reels from the pains of its boom and bust on US public markets.
Subscribe to TechCrunch’s crypto newsletter “Chain Reaction” for news, funding updates and hot takes on the wild world of web3 — and take a listen to our companion podcast!
from TechCrunch https://ift.tt/aLzOs58
via Tech Geeky Hub
No comments:
Post a Comment