The CEO of Blockfi claims that FTX has the option to buy a cryptocurrency lender for up to $240 million.. Zac Prince, a co-founder of Blockfi, claims that the company has definite agreements in place with the cryptocurrency firm FTX and that shareholder approval is still pending. Prince said that while the deal’s overall value is $680 million, $240 million of that sum might be used to buy Blockfi at a variable price up to that sum. Co-founder of Blockfi Zac Prince said that his business has reached a deal with Sam Bankman-cryptocurrency Fried’s startup FTX. The transaction, which aims to “guard client funds,” is still awaiting shareholder approval. A $400 [million] revolving credit facility that is subordinate to all client money is a feature of the agreement, Prince stated. FTX has “an option to purchase Blockfi at a variable price of up to $240M dependent on performance triggers,” the Blockfi CEO continued.
Prince explained that Blockfi has not yet received loans and that the company has raised interest rates for its Blockfi Interest Accounts (BIA). “Blockfi fees for BTC, ETH, USDC, GUSD, PAX, BUSD and USDT are increasing at all levels,” the company said in a statement about the fee increase. Blockfi’s CEO went on to explain what led the company to its current predicament, citing cryptocurrency lender Celsius and crypto hedge fund Three Arrows Capital (3AC). According to Prince, while BlackFi was exposed to zero degrees Celsius, the Celsius thaw resulted in a significant “customer exodus” from the BlackFi platform. From 3AC, Blackfay revealed a crypto hedge fund that recently filed for Chapter 15 bankruptcy. “The news about 3AC sent even more fear into the market… we were among the first to fully accelerate our additional debt to 3AC and also liquidated and guaranteed. the entire depot,” Prince noted. “[Blockfi] suffered $80 million in losses, a fraction of the losses reported by others.”
Prince said how Blockfi got several proposals from other companies: “We were provided with numerous unpleasant solutions where client assets would suffer a haircut or be beneath a lender in the capital stack.” “These options contrast with our basic philosophy of ‘Clients not Customers’ as well as the interests of Blockfi and our shareholders,” Prince said. “I, [Flori Marquez], and our board found them to be wholly unacceptable.”