NEXO's previously proposed $850 million acquisition offer! BlockFi had the opportunity to escape the FTX crisis.

The cryptocurrency lending platform BlockFi has encountered financial crises twice this year, once due to being implicated in the 3AC bankruptcy event earlier in the year, and another recently due to the impact of FTX. However, there have been recent reports that the cryptocurrency lending institution Nexo had intentions to acquire BlockFi. If BlockFi had made different decisions initially, perhaps it could have avoided the losses caused by the recent FTX incident.

BlockFi Faces Financial Crisis Twice

BlockFi was affected by the bankruptcy of 3AC earlier this year, resulting in a loss of $80 million and facing a financial crisis. However, after reaching an agreement with FTX US, BlockFi secured a $400 million revolving credit line, allowing the company to resume normal operations and avoid being acquired by other platforms.

Full report: BlockFi not acquired! Announces negotiation results with FTX US: Obtained $400 million credit line with $2.4 billion acquisition option

However, FTX and FTX US declared bankruptcy reorganization on the 11th due to poor internal cash flow management and excessive leverage. As a result, BlockFi, which has significant funds custodied by FTX, was hit again. The Wall Street Journal even reported that BlockFi may apply for bankruptcy protection, and even plans to lay off employees. Currently, BlockFi has suspended user withdrawals.

Full report: The Wall Street Journal: BlockFi may apply for bankruptcy protection, plans layoffs, continues to suspend withdrawals

Nexo's $850 Million Proposal

Currently, BlockFi is facing a financial crisis again. However, according to a report by The Block, BlockFi seemed to have a chance to avoid this disaster.

The Block stated that it holds an investment proposal from crypto lender Nexo to BlockFi in July this year, valued at around $850 million. However, at that time BlockFi did not accept this proposal and chose to reach an agreement with FTX US.

In response, Nexo co-founder Antoni Trenchev expressed confusion, as he believed that their proposal was better than what FTX US offered, and that if BlockFi had accepted Nexo's proposal, it might not be in the current situation.

"We already knew that Alameda was BlockFi's largest debtor, second only to 3AC, which had just gone bankrupt. Nexo's proposal focused on better risk management, cost reduction, new products, and the market, which could have created a lot of value for all stakeholders." Antoni Trenchev said.

Nexo's proposal consisted of the following:

1. Acquire 51% of BlockFi's equity for $30 million through a combination of cash and shares.
2. Pay $30 million to existing BlockFi shareholders once BlockFi's revenue products are successfully registered with the SEC.
3. A $500 million credit line to address BlockFi's liquidity needs.
4. A call option for the remaining 49% equity of BlockFi for five years, with a valuation of 10 times, approximately $288 million.
5. Termination of unvested options for BlockFi employees to increase the shares of existing shareholders.

The total value of the proposal is approximately $850 million, far exceeding the $680 million that FTX US could provide. However, BlockFi has not responded to this report by The Block, and it is unclear why they did not choose Nexo's proposal initially.