Insider: FTX seeks to acquire lending platform BlockFi, expected to lay off 80% of staff post-acquisition.

Despite claiming financial stability amidst crises faced by other lending platforms, BlockFi has been continuously seeking funding and loans since June. There are now rumors circulating that FTX is looking to acquire BlockFi directly.

6/22 Receives Funding and Initial Negotiations

BlockFi received a $250 million "revolving credit facility" from FTX on 6/22, following which The Wall Street Journal reported that FTX is in talks for an equity financing deal with BlockFi.

Sources also indicated that compared to previous funding rounds, BlockFi is seeking a new round of financing at a lower valuation.

6/24 BlockFi Shareholders Intervene

According to earlier reports, Morgan Creek Digital partner Morgan Creek, an existing shareholder and previous funder of BlockFi, stated that they are coordinating with several crypto venture capitalists to provide equity financing proposals to BlockFi.

He emphasized that this move is to counter the acquisition by FTX, as FTX's previous credit deal posed a threat to existing shareholders. FTX has the right to convert loans into BlockFi equity without restrictions through credit transactions, potentially excluding existing shareholders and all previous round investors.

The reason FTX is a preferred choice for BlockFi is that among all potential funders, FTX is the only institution capable of allowing users to withdraw funds without profits. If BlockFi chooses to work with others, users will face a lengthy waiting period for withdrawals.

6/29 FTX Seeks Direct Acquisition

According to sources cited by The Block, the credit deal allows FTX to acquire 50% of BlockFi's equity, with the remaining equity available for purchase at $25 million.

Sources also indicated that if FTX's acquisition is successful, significant layoffs will occur, with 80% of the BlockFi team members potentially facing termination.