FTX Exchange and BlockFi Agree on Mutual Acquisition Terms

• FTX US has inked a term sheet that allows for a takeover of the ailing crypto lender.
• BlockFi would take care of its customers before it had to make good on its debt to FTX.

FTX US, the U.S. section of the crypto exchange run by billionaire Sam Bankman-Fried, has concluded a deal with BlockFi for a revolving line of credit and possible purchase. As BlockFi CEO Zac Prince pointed out in a tweet, the acquisition has a total value of $680 million. It’s possible that BlockFi might be purchased for up to $240 million, depending on performance.

Rumors Finally Rest

Rumors had been swirling that FTX was planning to purchase BlockFi for as little as $25 million. Prince denied those reports on Twitter on Thursday. However, FTX US has inked a term sheet that allows for a takeover of the ailing crypto lender.

The $680 million arrangement expands the revolving line of credit from FTX to $400 million, up from the previously stated $250 million, while keeping any payments on it subordinate to client money. In other words, if the chips were down, BlockFi would take care of its customers before it had to make good on its debt to FTX.

BlockFi CEO Zac Prince tweeted:

“We have not drawn on this credit facility to date and have continued to operate all our products and services normally.”

During the week of June 12, BlockFi noticed an upsurge in client withdrawals when rival Celsius put a freeze on customer withdrawals to prevent a bank run. Celsius has recruited two bankruptcy restructuring companies since then and announced on its blog that it would take longer to stabilize the company.

While he denied that BlockFi was exposed to bad debt from Celsius, Prince admitted that his business lost $80 million due to the forced bankruptcy of Singapore hedge fund Three Arrows Capital, also known as 3AC.

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