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BlockFi not acquired! Reveals outcome of negotiations with FTX US: Secures $400 million credit line, with $240 million acquisition option.

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BlockFi not acquired! Reveals outcome of negotiations with FTX US: Secures $400 million credit line, with $240 million acquisition option.

Financially troubled lending platform BlockFi, rumored to be sold at a discounted price of $25 million to the exchange FTX due to market speculation, initially denied the reports. In the early hours of July 2nd, BlockFi CEO Zac Prince finally officially addressed the situation. Zac Prince stated that in the investment terms between BlockFi and FTX US, advantages for the main stakeholders of BlockFi have been secured.

BlockFi and FTX US Reach Agreement: Available for $240 Million Sale

Zac Prince stated that BlockFi reached a final agreement with FTX US yesterday:

  • A $400 million revolving credit facility for all user funds
  • With acquisition options based on loan default conditions, BlockFi can sell for up to $240 million

Zac Prince added that considering other potential considerations, the overall valuation would reach $680 million. He said, "We have not yet drawn on this credit line and continue to operate all products and services as usual. In fact, we have raised interest rates, effective today."

Why Negotiate with FTX US?

Zac Prince mentioned that the volatility in the cryptocurrency market, especially events related to Celsius and 3AC, had a negative impact on BlockFi. The news of Celsius suspending user withdrawals on 6/12 sparked panic withdrawals at BlockFi.

Dealing with 3AC, Loss of $80 Million

Zac Prince stated that the lending relationship between BlockFi and 3AC was over-collateralized, and they had executed liquidations and hedges but still incurred an $80 million loss. This is the actual impact brought by 3AC, and BlockFi's losses are limited and will be absorbed by the company without affecting user funds. Regarding BlockFi's loss situation, Zac Prince mentioned that more information would be released as 3AC discloses more bankruptcy details.

Despite the significant loss in this incident, Zac Prince emphasized their policies on market volatility and risk management in lending investments.

Everything for the Users

Zac Prince stated that increasing capital on the balance sheet was to support liquidity and protect user funds. He mentioned that they had received many options that would harm user rights but could not accept them. Therefore, they ultimately chose to commit to protecting users with FTX US, and BlockFi will continue with the strong capital provided by FTX US.

Zac Prince mentioned that BlockFi has paid out over $575 million in interest to users with $10 million in interest payments today. He understands the market's panic and is disappointed about some leaked discussion details, but he remains confident in BlockFi's continued operations.