Crypto Lender Blockfi Secures $250 Million Line of Credit From FTX, CEO Says Capital Will Bolster Its Balance Sheet – Blockfi, a cryptocurrency lender, revealed on Tuesday that FTX has granted the company a $250 million line of credit. The capital will be used to bolster Blockfi’s “balance sheet and platform strength,” according to the company’s CEO Zac Prince, who made the announcement on Twitter.
It has been a challenging year for crypto lenders as a result of the significant value decrease of digital assets over the past few months. One lender, Celsius, stopped accepting withdrawals last week due to claims of insolvency.
In 2021, U.S. securities regulators from numerous states delivered cease and desist orders to Celsius and the crypto lender Blockfi. The U.S. Securities and Exchange Commission (SEC) filed a complaint against Blockfi in February 2022 for failure to register its retail crypto lending products.
The co-founders of Blockfi, Zac Prince and Flori Marquez, announced during the second week of June that “approximately 20 percent” of the company’s staff will be laid off as a result of “market conditions” that had a negative impact on the business.
On June 16, Prince discussed speculation regarding BlockFi’s risk management practices, and the Blockfi CEO highlighted that the company always implements “prudent and proactive risk management.”
On Tuesday, Prince announced that FTX had granted Blockfi a $250 million line of credit. The Blockfi CEO announced that the company has signed a term sheet with FTX to create a $250 million revolving credit facility, giving it access to capital that would strengthen its balance sheet and platform.
The proceeds of the credit facility are designed to be contractually subordinate to all client balances across all account types (BIA, BPY, including loan collateral), according to Prince, who stated as much in a thread on Twitter.
The Blockfi CEO went on to say how proud he was of how the business handled risk throughout the recent volatility in the cryptocurrency market. He also stated that the deal with FTX unlocks future collaborations with the crypto company.
Since Celsius stopped processing withdrawals, the crypto-lending company updated the public in a recently posted blog post. “We want our community to know that maintaining the stability of our operations and liquidity is our goal.” The Celsius blog post explains that this process will take some time.