Topline
Cryptocurrency exchange FTX and cryptocurrency lender BlockFi for FTX have entered an agreement that will give FTX an option to purchase BlockFi for what was described as a “variable price” that could go as high as $240 million, BlockFi CEO Zac Prince announced in a series of Friday tweets, as the crash in crypto prices continues to shake up the sector.
BlockFi’s price tag is far short of its $3 billion valuation from last March.
Key Facts
The sale price is linked to “performance triggers,” Prince said, and CNBC reported Thursday that FTX may buy BlockFi for as little as $25 million.
FTX will extend another $400 million of credit to BlockFi in the deal, Prince said.
The sale price is far shy of the $3 billion valuation BlockFi received in a $350 million funding round last March.
Key Background
CNBC and Bloomberg reported Thursday FTX was closing in on a deal to acquire BlockFi. FTX’s founder and CEO Sam Bankman-Fried is worth $19.7 billion, by Forbes’ calculations, making the 30-year-old the 79th wealthiest person in the world. FTX gave $250 million in credit to BlockFi last Tuesday. BlockFi has been impacted sharply by the ongoing crash in the cryptocurrency market. BlockFi cut about 20% of its workforce earlier this month, joining numerous other cryptocurrency firms in slashing jobs. The price of bitcoin is down nearly 60% year-to-date to $19,580 and has fallen nearly 35% in the last month.
Crucial Quote
Prince wrote about what led BlockFi to enter the deal with FTX: “Crypto market volatility, particularly market events related to Celsius and 3AC, had a negative impact on BlockFi. The Celsius news on June 12th started an uptick in client withdrawals from BlockFi’s platform despite us having no exposure to them.” Prince is referring to cryptocurrency lender Celsius pausing withdrawals June 13 and cryptocurrency fund Three Arrows Capital reportedly being ordered into liquidation this week.
Further Reading
Crypto Exchange FTX Close To Buying BlockFi, Reports Suggest (Forbes)
Source: https://www.forbes.com/sites/dereksaul/2022/07/01/ftx-enters-agreement-to-buy-blockfi/