BlockFi obtains a $250 million line of credit from FTX

Crypto lender BlockFi secured $250 million revolving line of credit from crypto exchange FTXCEO Zac Prince announced on Twitter on Tuesday morning.

“Today @BlockFi signed a term sheet with @FTX_Official to secure a $250m revolving credit facility giving us access to capital which further strengthens our balance sheet and the strength of our platform,” said he writes in a Twitter feed.

Prince said FTX loan proceeds are contractually subordinate to all customer balances, which means BlockFi will fulfill its obligations on customer accounts — BlockFi interest accounts, BlockFi personalized return, and loan collateral — before paying FTX. .

The company was particularly affected by the crisis. Last week, BlockFi joined the growing list of companies cutting staff to weather the crypto winter, cutting its staff by “around 20 %.”

At the time, Prince said on Twitter that all BlockFi products and services would continue to operate as normal.

This is a timely disclaimer.

Celsius, one of BlockFi’s crypto lending competitors, froze account withdrawals, trades and transfers last Sunday to help it cope with the weather.”extreme market conditions.” Yesterday society said so needs more time to stabilize before unblocking the accounts.

Meanwhile, BlockFi has encountered its own headwinds. Last week, the company made a $1 million payment to Iowa Division of Insurance as part of a larger $100 million fine that BlockFi agreed to pay to settle an investigation into its high-yield accounts.

“Future Collaboration”

In his announcement of the line of credit, Prince hinted that this could open the door for a partnership between FTX and BlockFi.

“This deal also unlocks future collaboration and innovation between BlockFi and FTX as we work to accelerate prosperity around the world through crypto financial services,” he said on Twitter.

The feeling seems mutual. Yesterday, FTX CEO Sam Bankman-Fried said the cryptocurrency exchange had a “responsibility” to bail out struggling companies during this relentless bear market.

“Even though we weren’t the ones who caused it, or weren’t involved in it,” he said, referring to the wave of “contagion” affecting the crypto markets. “I think that’s what’s healthy for the ecosystem, and I want to do what can help it grow and thrive.”