FTX plans to acquire stakes in the BlockFi crypto lender after providing the platform with a $250 million bailout recently so let’s read more today in our latest cryptocurrency news today.
FTX exchange led by Sam Bankman Fried entered into a negotiations phase to acquire a stake in the crypto lending company Blockfi according to reports in the Wall Street Journal. The acquisition talks came on the heels of the BlockFi announcement that it secured a $250 million line of credit from FTX which was seen as a bailout. The agreement unlocked future collaboration and innovation between FTX and BlockFi as they are working to speed up the prosperity worldwide via crypto financial services as the CEO Zac Prince added.
— Zac Prince (@BlockFiZac) June 21, 2022
The definitive documents that spell out the terms of BlockFi’s line of credit from FTX are underway and can include the exchange acquiring a stake in the battered crypto lender. Some sources familiar with the matter told Wall Street Journal that their equity agreement hadn’t been reached yet. FTX plans to acquire BlockFi stakes but Prince said that the revolving line of credit will be subordinate to client funds and the company will meet its obligations to customers before repaying FTX.
Prince said that taking the line of credit was quite offensive and defensive in both parts in terms of strategy and that the company processed a higher than usual volume of the withdrawals a week ago with the news of a possible bank run at Celsius shaking the markets. Celsius suspended the user withdrawal from its platform two weeks ago and has been silent ever since:
“We felt that it was a smart, offensive and strategic decision for BlockFi to bolster the balance sheet with a big number, and tell everybody about it.”
VCs: “we’d love to help you backstop crypto firms and provide liquidity because we care deeply about preventing market contagion”
also VCs: “can we please do it for the one great company (after you fix it) and make a lot of money doing it, you can take the others k thx bye”
— SBF (@SBF_FTX) June 23, 2022
In the meantime, FTX CEO Bankman Fried was quiet about the BlockFi deal but he did comment on the reluctance of venture capitalists to provide more of a backstop for startups during the market downturn. Bankman Fried said before the BlockFi deal was announced that he thinks companies have a serious responsibility to consider stepping in even if it means a loss to them but in order to stem contagion.
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