Pennies On The Dollar: FTX Closes In On Deal To Purchase BlockFi For Just $25M

Sam Bankman-Fried led FTX is reportedly closing in on a deal to purchase BlockFi in a deal being valued at around $25 million. The deal comes after FTX reportedly gave BlockFi an emergency $250 million line of credit to the embattled crypto lender. 

Just earlier this month, BlockFi was close to finalizing a round after being valued at $1 billion. 

Details Of The Purchase 

With the term sheet almost finalized, sources close to the matter have revealed the deal is expected to be signed and completed by this week. The deal signifies a staggering fall for BlockFi, with FTX expected to pay around $25 million for the embattled company. This figure is 99% lower than BlockFi’s last private valuation.

Another source with ears on the matter put the price of the deal closer to the $50 million mark. For some context, BlockFi was last valued at $4.8 billion. However, the potential for a shift in the price between now and Friday remains, with the acquisition set to take months to complete. The source also revealed that the deal could end up being an option to acquire BlockFi at a later time, depending on regulatory approval. 

Uncertainty Around Actual Figure 

Sources also revealed that the end of the quarter acted as a catalyst for the deal. Initial reports stated that FTX was looking at acquiring an equity stake in the company, while other reports emerged stating that there was an outright sale in the works. FTX refused to comment on the speculation, with a spokesperson stating that the exchange would not be commenting on the matter. However, Zac Price, BlockFi CEO, pushed on the reported figures, taking to Twitter to respond, stating, 

“I can 100% confirm that we aren’t being sold for $25M. I encourage everyone to trust only details that you hear directly from @BlockFi. We will share more [with] you as soon as we can.”

A $250 Million Line Of Credit 

The sale comes only a week after FTX had extended a $250 million line of credit to BlockFi. Sam Bankman-Fried, CEO of FTX, had stated at the time that the line of credit would help BlockFi navigate the current market situation from a position of strength. Bankman-Fried has emerged as a lender of last resort in recent times. Apart from BlockFi, Bankman-Fried’s Alameda Research had given a $500 million loan to Voyager. 

A Floundering Market 

BlockFi’s sale looks to be the latest setback for the crypto markets and crypto lending companies against the backdrop of plunging prices. Lending companies have struggled with significant liquidity issues as counterparties fail to meet margin calls. Earlier, Celsius and CoinFLEX had halted customer withdrawals after citing extreme market conditions. 

Crypto hedge fund Three Arrows Capital has also been liquidated, making it one of the most significant casualties of the prevailing market situation. Sources revealed that equity investors in BlockFi have been “wiped out” and are writing off the value of their losses. The source also revealed that multiple offers were being considered.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.